SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-K

                   FOR ANNUAL AND TRANSITION REPORTS PURSUANT
             TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
          For the year ended December 31, 1996

                                    OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the transition period from            to

                        Commission file number: 333-18957

                         CLARK Material Handling Company
             (Exact name of registrant as specified in its charter)

                     Delaware                          61-1312827
          (State or other jurisdiction of           (I.R.S. Employer
           incorporation or organization)         Identification No.)

               172 Trade Street
             Lexington, Kentucky                          40511
      (Address of registrant's principal               (Zip Code)
              executive offices)

Registrant's telephone number, including area code:  (606) 288-1200

Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [ x ] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]

         As of  January 1, 1997,  there  were 1,000  shares of the  registrant's
common  stock  outstanding,  all of  which  were  owned by an  affiliate  of the
registrant.

                    Documents incorporated by reference: None


<PAGE>




                         CLARK Material Handling Company
                       Index to Annual Report on Form 10-K


                                                                            Page
                                                                            ----

PART I........................................................................3
   Item 1 --  BUSINESS........................................................3
   Item 2 --  PROPERTIES......................................................8
   Item 3 --  LEGAL PROCEEDINGS...............................................9
   Item 4 --  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............9

PART II.......................................................................9
   Item 5 --  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS.............................................9
   Item 6 --  SELECTED FINANCIAL DATA........................................10
   Item 7 --  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS............................11
   Item 8 --  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................15
   Item 9 --  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE............................15

PART III.....................................................................16
   Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............16
   Item 11 -- EXECUTIVE COMPENSATION.........................................17
   Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT.................................................19
   Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................21

PART IV......................................................................23
   Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
              REPORTS ON FORM 8-K............................................23


                                     - 2 -
<PAGE>


         The  following  summary is  qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial statements
(including notes thereto)  included  elsewhere in this report.  Unless otherwise
indicated or the context  otherwise  requires,  references  to the  "Company" or
"CLARK" are to Clark Material Handling Company  (including its predecessors) and
the other material  handling  operations  acquired from certain  subsidiaries of
Terex Corporation ("Terex") pursuant to the Acquisition (as defined) for periods
prior  to the  Acquisition,  and to  CLARK  Material  Handling  Company  and its
subsidiaries  for periods from and after the  Acquisition,  after giving  effect
thereto.

         The Private  Securities  Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward  looking  statements.  Certain matters  discussed in
this  filing  could be  characterized  as forward  looking  statements,  such as
statements relating to plans for future expansion,  capital spending,  financing
sources  and  effects  of  regulation  and  competition.  Such  forward  looking
statements  involve  important risks and  uncertainties  that could cause actual
results  to differ  materially  from those  expressed  in such  forward  looking
statements.


                                     PART I

Item 1 -- BUSINESS

General

         CLARK is a leading international designer, manufacturer and marketer of
a  complete  line of  forklift  trucks  including  internal  combustion  trucks,
electric  riders,  narrow aisle  stackers  and powered hand trucks.  The Company
invented the platform truck in 1917, the tow tractor in 1924 and the forklift in
1928,  and produced  the first  electric  forklift in 1942.  As a result of this
history  of  innovation,  management  believes  CLARK(R)  is  one  of  the  most
recognized brand names of forklift trucks in North America.

         Management  believes  that CLARK has a large  installed  fleet in North
America with over 250,000 units, and has a total of approximately  350,000 units
in operation worldwide. This large installed fleet has allowed CLARK to generate
significant   ongoing   replacement  parts  sales,   which  typically   generate
substantially  higher gross margins and provide a more stable  revenue base than
new truck  sales.  CLARK's  North  American  operations  generally  account  for
approximately 70% of its net sales and its European  operations  account for the
remaining 30%. CLARK distributes its products to a diverse customer base through
a global network of 285 dealers, with more than 560 locations.

         For  information  concerning the Company's  backlog  orders,  see "Item
7--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations -- Backlog."  Information  about industry and geographic  segments is
included in notes A and L, respectively, to the Company's consolidated financial
statements  included  under "Item 8 -- Financial  Statements  and  Supplementary
Data."

The Acquisition

         The  Company  and CMH  Holdings  Corporation,  a  Delaware  corporation
("Holdings"),  were formed by Citicorp  Venture Capital Ltd. ("CVC") and certain
members  of  management  of CLARK  (the  "Management  Investors")  to effect the
acquisition  (the  "Acquisition")  of  substantially  all the assets and certain
liabilities of Clark Material Handling Company, a Kentucky corporation,  and all
of the  outstanding  capital stock of certain of its  affiliates,  including its
German,  Korean,

                                     - 3 -
<PAGE>

Brazilian and Canadian  affiliates.  The Acquisition was consummated on November
27, 1996 pursuant to a Stock and Asset Purchase and Sale  Agreement  dated as of
November 9, 1996 among Terex and certain of its  subsidiaries,  as sellers,  and
the Company, as buyer (the "Acquisition Agreement"). The aggregate consideration
for  the  Acquisition   was  $139.5  million,   which  was  subject  to  certain
post-closing  adjustments.  To finance the Acquisition (including the payment of
related fees and  expenses):  (i) CVC, Dr. Martin M. Dorio,  President and Chief
Executive Officer of the Company,  and Thomas J. Snyder,  who was elected to the
Board of Directors of the Company in connection with the Acquisition,  purchased
$17.0 million of preferred stock (the "Holdings Preferred Stock"),  $1.0 million
of voting  common stock (the  "Holdings  Class A Stock") and  non-voting  common
stock (the  "Holdings  Class B Stock",  and together  with the Holdings  Class A
Stock,  the  "Holdings  Common  Stock") and $7.0 million of junior  subordinated
debentures (the "Holdings  Debentures") from Holdings for $25.0 million in cash;
(ii) Holdings  contributed such $25.0 million to the Company in exchange for all
of the capital stock of the Company;  and (iii) the Company issued and sold $130
million of 10 3/4% Senior Notes due 2006 (the "Notes").

         In  connection  with the  Acquisition,  the Company  entered into a new
$30.0 million revolving credit facility (the "Revolving Credit Facility"), which
is secured by the accounts  receivable  and inventory of the Company's  domestic
operations.  The  Company  did not draw upon the  Revolving  Credit  Facility in
connection with the transactions.

Products

         CLARK currently offers over 100 truck designs within five major product
lines:  light internal  combustion  ("IC") trucks (with a capacity of 1.0 to 5.0
tons),  heavy IC trucks  (with a  capacity  of 5.5 to 17.5  tons),  narrow-aisle
stackers (with a capacity of 1.5 to 2.5 tons),  electric riders (with a capacity
of 1.3 to 6.0 tons) and  powered  hand  trucks  (with a  capacity  of 2.0 to 4.0
tons).

         Light  IC  trucks  are  used  for  general  warehousing  needs  and are
generally   powered  by  liquid  propane.   Such  trucks  are  well  suited  for
manufacturing  and  distribution  applications  which  require a high  degree of
maneuverability. Heavy IC trucks are specialty products designed for use in more
demanding   situations  such  as  heavy   manufacturing  or  container  handling
applications.  Narrow-aisle  stackers provide solutions for high density storage
needs and operate in six to eight foot aisles and reach  heights of more than 30
feet. Electric riders are designed for indoor use in warehousing, manufacturing,
distribution and other  applications and are powered by a rechargeable  electric
battery.   Management   estimates  that  light  IC  trucks,   heavy  IC  trucks,
narrow-aisle  stackers and electric riders represent  approximately 58%, 3%, 15%
and 24% of the unit volume of the forklift truck industry, respectively. Powered
hand  trucks  are  generally  used  in the  transportation  and  order-selecting
businesses.

         CLARK  tailors its  products  to meet  customers'  particular  material
handling  needs.  To further meet these needs,  CLARK adds  attachments  such as
container handlers, side shifters,  roll clamps, block handlers,  carton clamps,
push-pulls (slip-sheet) and fork positioners.

         Rapid  development  and  introduction  of new and  redesigned  products
incorporating  the latest  materials  handling  technology is a key component of
CLARK's  strategy.  Management  believes that CLARK has introduced  more new and
redesigned  models in the last two years  than any other  major  forklift  truck
manufacturer  and plans to  continue a rapid pace of new  product  introduction.
CLARK  maintains an  engineering  staff which is  responsible  for designing new
products and improving existing product lines.

         Since 1993,  CLARK has redesigned a substantial  portion of its product
line.  In December  1994,  CLARK  introduced  the 2-3 ton  Genesis(TM)  IC truck
targeting the light IC market.  CLARK  invested  approximately  $15.0 million to
develop  the  Genesis(TM)   truck.  The  Genesis(TM)   truck  provides  improved
ergonomics,  performance,  reliability and  serviceability,  and provided higher
gross margins than its predecessor, primarily due to its lower production cost.

                                     - 4 -
<PAGE>


         CLARK's  European   subsidiaries   ("CLARK   Europe")   introduced  the
Genesis(TM)  2-3 ton gas and  diesel  MegaStat(TM)  model  in  April  1995.  The
Genesis(TM) 2-3 ton MegaStat(TM) IC received the "General Lift Truck Innovation"
award in 1996 from the Fork Truck  Association in the United Kingdom.  In August
1996,  CLARK continued to expand its  Genesis(TM)  family with the addition of a
4-5.5 ton CGP lift truck. Also, in 1995, CLARK made significant additions to its
narrow aisle  stackers  product line which was expanded to include  double reach
and straddle models.

Aftermarket Parts

         Management  estimates  that since the  Company's  inception  nearly one
million forklift trucks have been manufactured by CLARK and its predecessors and
that it currently has in service  approximately  350,000 trucks worldwide,  with
approximately  250,000  in North  America,  70,000 in Europe and 30,000 in other
international markets,  generating a substantial  aftermarket parts business for
CLARK.  CLARK's  worldwide  installed fleet of  approximately  350,000  forklift
trucks generates an estimated $240.0 million in annual global  aftermarket parts
sales, of which CLARK has historically captured an estimated 40% share.

         CLARK's parts distribution operation undertakes purchasing and customer
services for aftermarket parts. CLARK distributes its aftermarket parts in North
America through a distribution center in Southaven, Mississippi, (the "Southaven
Facility"),  in Europe through a warehouse located in Saarn, Germany and for the
World Trade  Division of CLARK,  through two sales and  distribution  facilities
located in Seoul, Korea and the State of Sao Paulo, Brazil, respectively.  CLARK
shares the Southaven Facility with Terex and, pursuant to the Acquisition, CLARK
and Terex  entered into a Service  Agreement  providing for the continued use by
CLARK of such facility.  For information  regarding the Service  Agreement,  see
"Item 13--Certain Relationships and Related Transactions--Service Agreement."

Manufacturing Operations

         CLARK's  Lexington,  KY plant  produces both IC and electric  forklifts
with lift capacities ranging from 1-17.5 tons and is equipped with five assembly
lines and two heavy IC  assembly  bays.  The  Lexington  plant is  primarily  an
assembly  operation with welding and painting  capabilities,  operates one shift
per day and produces an average of 50 lift trucks per day.

         CLARK  Europe's  Mulheim   manufacturing   facility  produces  both  IC
forklifts  (Diesel,  LP gas  and  natural  gas)  with  hydrodynamic  as  well as
electronically  controlled hydrostatic drive (MegaStat(TM)) and electric powered
forklifts  equipped  with  D/C  as  well  as  frequency-controlled   A/C  motors
(MegaAC(TM)) in the capacity range of 1-5 tons. The Mulheim facility is equipped
with four assembly lines, one for electric trucks, two for IC trucks and one for
uprights.   The  manufacturing  process  includes   pre-production  and  welding
production  of frames and  uprights  and a powder dry paint  system was recently
installed to ensure high-quality painting of frames and uprights. CLARK Europe's
plant  currently  operates  one shift per day and produces an average of 20 lift
trucks per day.  The  Mulheim  plant has been  awarded  ISO 9001  certification,
indicating  that the Company has achieved and sustained a high degree of quality
and consistency with respect to its products.

Dealer Network

         CLARK  markets both  original  equipment  and parts through a worldwide
dealer network.  CLARK currently has  approximately  100 independent  dealers in
each of North America and Europe and owns three dealers in Europe.  In addition,
outside of North America and Europe,  CLARK markets and  distributes  its export
products   through  its  Clarklift   World  Trade  Division  (the  "World  Trade
Division").   The  World  Trade  Division   markets  its  products   through  95
distributors  operating in the Asian,  African,  Middle  Eastern,  Caribbean and
Latin American  markets.  CLARK's dealers and distributors  generally market the
full CLARK product line and maintain comprehensive service capabilities. CLARK's
sales  organization  coordinates  sales  and  promotional  activities,  provides
ongoing dealer training and facilitates dealer communications.  CLARK sells to a
diversified  customer base, with no single customer  accounting for more than 5%
of total sales.

                                     - 5 -
<PAGE>


Suppliers

         The Company  strategically  relies upon  outside  suppliers  for a vast
majority of the individual components of a lift truck.  Management believes that
such outsourcing allows CLARK greater  flexibility in varying its cost structure
in response to changing market conditions.

         Principal  materials  used  by  CLARK  in  its  various   manufacturing
processes include steel, castings, engines, tires, electric controls,  uprights,
transaxles and motors, and a variety of other fabricated or manufactured  items.
While  substantially  all such  materials are typically  available from multiple
suppliers, CLARK depends exclusively upon certain suppliers of key parts used in
its  lift  trucks.  From  time  to  time,  certain  of  CLARK's  suppliers  have
experienced difficulties in meeting CLARK's production schedules. The failure of
a key supplier to meet the Company's  requirements on a timely basis or the loss
of a key supplier could lead to delays in the Company's manufacturing operations
and have a material adverse effect on the Company.

Competition

         CLARK  produces  one of the  leading  forklift  truck  brands  in North
America, although NACCO Industries, Inc., ("NACCO"), through its Hyster and Yale
divisions,  produces more forklift trucks annually.  In addition to NACCO, other
major  North  American   competitors  include  Toyota  Lift,  Inc.,   Mitsubishi
Caterpillar Forklift America Inc., Nissan Forklift Corp. North America,  Komatsu
Forklift USA Inc. and Daewoo in both IC trucks and  electric  riders,  and Crown
Equipment  Corp. and Raymond  Corporation in electric  riders alone.  In Europe,
CLARK  competes  with  Linde  AG,  the  European  market  leader,   as  well  as
Jungheinreich AG, Toyota Lift, Inc. and NACCO. CLARK also competes with a number
of specialty manufacturers.

         The truck market in which the Company  competes is highly  competitive.
The Company  encounters  significant  competition  particularly  from lower cost
foreign  competitors,  including  manufacturers  located in Japan and Korea. The
Company competes on the basis of quality, price, on-time delivery, product line,
ease of  use,  safety,  comfort  and  customer  service.  Many of the  Company's
competitors  have greater  financial  resources than the Company.  Additionally,
certain of the Company's products are subject to changing technology which could
place the Company at a competitive  disadvantage relative to product innovations
by  competitors.  There can be no  assurance  that the  Company  will be able to
achieve the technological advances that may be necessary to remain competitive.

Intellectual Property

         The Company relies on a combination of trademarks, service marks, trade
names, patents, licensing arrangements,  trade secrets, know-how and proprietary
technology  to  secure  and  protect  its  intellectual   property  rights.   In
particular, the Company's CLARK(R), Clarklift(R),  Powrworker(R) and Genesis(TM)
trademarks are of particular  importance to the Company's business.  The Company
is   currently   undertaking   to  obtain   trademark   registrations   for  its
MegaValve(TM),  MegaStat(TM),  MegaPro(TM) and MegaAC(TM) marks. The loss of the
Company's  rights  under one or more of the  Company's  trademarks  could have a
material adverse effect on the Company's business.

         There  can be no  assurance  that the  Company  will be  successful  in
obtaining  approval of any present or future  patent or trademark  applications;
that any patents,  patent applications and patent licenses will adequately cover
the Company's  technologies or protect the Company from potential  infringements
by third parties;  that any  nondisclosure and  confidentiality  agreements will
provide  meaningful  protection  for the Company's  trade  secrets,  know-how or
proprietary  technology  in the event of any  unauthorized  use or disclosure of
such  information;  or that others will not obtain  access to, or  independently
develop technologies or know-how similar to, that of the Company. There also can
be no assurance  that future  litigation by the Company will not be necessary to
enforce its trademark,  patent and other  proprietary  rights,  or to defend the
Company  against  claimed   infringement  of  the  rights  of  others,   adverse
determinations in which could have a material adverse effect on the Company.

                                     - 6 -
<PAGE>


Employees

         As of  December  31,  1996,  CLARK's  total North  American  work force
consisted of  approximately  550 salaried,  hourly and temporary  employees.  In
addition,  approximately  25  CLARK  employees  are  located  at  the  Southaven
Facility,  which  the  Company  shares  with  Terex,  who  are  responsible  for
aftermarket  customer service and administration.  There has not been a union at
CLARK's North  American  manufacturing  operations for the past nine years since
moving to Kentucky.

         The union  employees of Terex at the  Southaven  Facility  engaged in a
labor dispute  beginning in 1995, which had a short term effect on the Company's
distribution  operations  at the facility but had no  appreciable  effect on the
conduct of  business or results of  operations.  Although  such union  employees
filed a  petition  with  the  National  Labor  Relations  Board  in May 1996 for
decertification  of the union,  there can be no  assurance  that  similar  labor
disputes  will not occur in the  future  which,  depending  upon the  timing and
duration of such disputes, could have a material adverse effect on the Company.

         As of December  31,  1996,  CLARK's  total work force  outside of North
America consisted of approximately 450 employees.  The Mulheim facility at Saarn
is represented by the German Metal Workers  (Industrie  Gewerkschaft  Metal) and
the  aftermarket  parts facility at Saarn is represented by the German Union for
Trading, Banking and Insurance (Gewerkschaft Handel, Banken und Versicherungen).
The  Mulheim  facility  has a total work force of  approximately  350,  of which
approximately  200 are members of the German Metal Workers,  and the aftermarket
parts  facility at Saarn has a total  workforce  of  approximately  65, of which
approximately  20 are  members  of the German  Union for  Trading,  Banking  and
Insurance.  There  are no  contracts  between  CLARK and the  unions,  but CLARK
follows  standard  practices by complying with contracts  between the unions and
the employers' association.

         Management  believes  that its  relationships  with its  employees  and
unions are good.

Environmental Matters

         As  with  most  industrial  companies,  the  Company's  facilities  and
operations  are  required  to comply  with and are  subject to  liability  under
federal,  state,  local and foreign  environmental  and worker health and safety
laws,  regulations  and  ordinances,  including those relating to air emissions,
wastewater  discharges  and the  management  and disposal of certain  materials,
substances and wastes  ("Environmental  Laws").  Certain of these  Environmental
Laws hold owners or operators of land or businesses liable for their own and for
previous  owners' or  operators'  releases  of  hazardous  or toxic  substances,
materials or wastes,  pollutants or contaminants,  including, in some instances,
petroleum and petroleum  products.  Compliance with  Environmental Laws also may
require  the  acquisition  of  permits  or  other   authorizations  for  certain
activities and  compliance  with various  standards or procedural  requirements.
Although the Company believes that its operations are in substantial  compliance
with current  regulatory  requirements under material  applicable  Environmental
Laws, the nature of the Company's  operations and the history of industrial uses
at some of its  facilities  expose  the  Company to the risk of  liabilities  or
claims with respect to environmental  and worker health and safety matters.  The
Company may also have contingent  responsibility for liabilities with respect to
environmental  matters  arising in connection  with the prior  operations of the
material  handling  business of Clark  Equipment  Company,  a predecessor of the
Company  ("CEC").  There can be no assurance  that material costs or liabilities
will not be incurred in connection with such liabilities or claims.

         In connection  with the  Acquisition,  the Company  agreed to indemnify
Terex and hold it harmless  from and against  all losses  which are  incurred or
suffered by Terex with respect to or arising out of the  Company's  business and
assets  except for such losses  which arise from or are in  connection  with any
real  property,  business  entities or assets which were not acquired as part of
the Acquisition (which Terex agreed to retain responsibility for and indemnified
the Company against).  No specific  environmental  losses were identified by the
parties in the  Acquisition  Agreement nor are there any known  material  losses
which  have been  asserted  by Terex  pursuant  to the  environmental  indemnity
provisions  of  the  Acquisition  Agreement  or  incurred  by the  Company.  The
environmental  indemnities  are  subject to certain  deductibles,  caps and time
limitations depending on the nature of the environmental claim.

                                     - 7 -
<PAGE>


     Based upon the Company's experience to date and the indemnities obtained in
connection with the  Acquisition,  the Company  believes that the future cost of
compliance   with   existing   Environmental   Laws  (or   liability  for  known
environmental  liabilities or claims) should not have a material  adverse effect
on the  Company's  business,  financial  condition  or  results  of  operations.
Compliance with such laws has, and will, require  expenditures by the Company on
a  continuing  basis.  Future  events,  such as  changes  in  existing  laws and
regulations  or their  interpretation,  may give rise to  additional  compliance
costs or liabilities  that could have a material adverse effect on the Company's
business,  financial  condition or results of operations.  Compliance  with more
stringent laws or regulations,  as well as more vigorous enforcement policies of
regulatory  agencies or stricter or different  interpretations of existing laws,
may require additional expenditures by the Company that may be material.


Item 2 -- PROPERTIES

         The  Company is  headquartered  in  Lexington,  Kentucky.  The  Company
currently  owns or leases 10 facilities  in North  America,  Europe,  Brazil and
Korea which are used for  manufacturing,  distribution,  sales,  warehousing and
service center activities.

         The following table outlines the principal  facilities  owned or leased
by CLARK or its subsidiaries:

          Facility Location                  Type of Facility
          -----------------                  ----------------
          Lexington, Kentucky.........       Manufacturing, warehouse and office
          Lexington, Kentucky*........       Sales, training and engineering
          Lexington, Kentucky.........       Warehouse
          Mulheim-Ruhr, Germany**.....       Manufacturing, engineering, power
                                             generation, maintenance and office
          Saarn, Germany..............       Warehouse
          Barcelona, Spain............       Sales branch
          Paris, France...............       Sales branch
          Lyon, France................       Sales branch
          State of Sao Paulo,
            Brazil....................       Parts distribution
          Seoul, Korea................       Parts distribution

----------
 * Owned.
** A portion of the facility is owned.


         CLARK also owns a  manufacturing  facility in Banwaal,  Korea which was
closed in the  fourth  quarter  of 1994 and is  presently  held for sale.  CLARK
Europe also presently leases unoccupied office space in Mulheim-Ruhr, Germany.

         Management believes that the Company's  facilities are suitable for its
operations and provide  sufficient  capacity to meet the Company's  requirements
for the foreseeable future.

                                     - 8 -
<PAGE>



Item 3 -- LEGAL PROCEEDINGS

          From time to time product  liability  claims are asserted  against the
Company  for  various  injuries  alleged to have  resulted  from  defects in the
manufacture and/or design of its products.  As of December 31, 1996, the Company
had  approximately 99 pending lawsuits relating to claims arising from accidents
involving its products. Most of these lawsuits are in various stages of pretrial
completion,  and certain plaintiffs are seeking punitive as well as compensatory
damages.  The Company is self-insured,  up to certain limits,  for these product
liability  claims,  as well as certain  exposures  related  to general  workers'
compensation and automobile liability. The Company has recorded and maintains on
its balance sheet reserves  relating to the estimated  liability,  based in part
upon  actuarial  determinations,  of the Company's  aggregate  exposure for such
self-insured  risks.  Effective  November  27,  1996,  the Company was no longer
self-insured for general workers compensation and auto liability and had various
insurance  policies with insuring  agencies.  The Company is involved in various
other  legal  proceedings  which  have  arisen  in  the  normal  course  of  its
operations.  The  Company  has  recorded  provisions  for  estimated  losses  in
circumstances  where a loss is  probable  and the  amount  or range of  possible
amounts of the losses is  estimable.  There can be no assurance  that any of the
foregoing reserves are adequate.

          The  Company  also  has  certain  other   contingent   liabilities  or
uncertainties for other obligations,  including contingent  liabilities relating
to the Company's guarantees of certain floor plan obligations and its obligation
to repurchase  equipment from certain  dealers and customers upon the occurrence
of certain events. The unfavorable resolution of product liability claims or any
other contingencies or uncertainties in the future could have a material adverse
effect on the Company.  See "Item 7 --  Management's  Discussion and Analysis of
Financial Condition and Results of Operations -- Contingencies,  Commitments and
Uncertainties."

Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          There were no matters  submitted to a vote of security holders for the
period ended December 31, 1996.


                                     PART II

Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          The Company's  common equity is not publicly traded and,  accordingly,
an established  market does not exist for such common  equity.  The Company is a
wholly owned  subsidiary of Holdings.  For certain  information  concerning  the
ownership of Holdings Preferred Stock and Holdings Common Stock, see "Item 12 --
Security Ownership of Certain Beneficial Owners and Management."

          No dividends have been paid on the Company's common equity.  There are
certain  limitations  on the payment of  dividends  in the  Company's  borrowing
arrangements.


                                     - 9 -

<PAGE>

Item 6 -- SELECTED FINANCIAL DATA

          During the five year period ended  December 31, 1996,  the Company has
been acquired two times in two separate purchase business combinations.  On July
31,  1992,  Terex  acquired the Company  from CEC.  From July 31, 1992,  through
November 26, 1996, the Company  operated as wholly owned  subsidiaries of Terex.
On November 26, 1996,  the Company was  acquired by Holdings.  Accordingly,  the
selected financial data shown below is not necessarily comparable as a result of
these  ownership  changes and the  resulting  adjustments  required for purchase
business combinations under generally accepted accounting principles.

          The information  contained in this table should be read in conjunction
with "Item 7 -- Management's  Discussion and Analysis of Financial Condition and
Results of  Operations"  and the  Company's  consolidated  financial  statements
included under "Item 8--Financial Statements and Supplementary Data.".

<TABLE>
<CAPTION>
                               Predecessor             Wholly owned Subsidiaries of Terex              The Company
                               -----------   --------------------------------------------------------  -----------
                              Seven Months   Five Months         Years Ended            Eleven Months   One Month
                                  Ended         Ended            December 31,               Ended         Ended
                                 July 31,    December 31, ----------------------------   November 26,   December 31,
                                   1992         1992       1993       1994       1995       1996           1996
                                   ----         ----       ----       ----       ----       ----           ----

Operating Data:
<S>                               <C>          <C>        <C>        <C>        <C>        <C>             <C>
Net Sales                         $288.5       $240.9     $395.6     $472.7     $528.8     $404.6          $46.8
Gross Profit                        13.4         22.5       22.3       42.9       44.7       45.9            4.9
Engineering, selling and
    administration expenses         29.9         19.3       46.5       41.7       31.2       27.0            3.0
Income (loss) from operations(1)   (16.4)         2.2      (28.6)     (14.0)       3.1       13.3            1.9
Income (loss) before
    extraordinary items and
    cumulative effect of change
    in accounting (1)              (17.7)        (5.1)     (44.9)     (25.3)     (17.4)      (2.1)            .5

Balance sheet data (at end
  of period):
Working capital (2)                 77.9         59.1       50.8       41.4       46.4       51.4           45.0
Net property, plant and
    equipment                       47.2         92.9       75.3       60.7       58.2       51.2           51.0
Total assets                       215.1        270.2      208.0      194.7      192.7      192.7          301.3
Long-term obligations (3)            7.8         93.4      120.0      125.9      143.0      151.3          133.6

<FN>
------------

(1)    Includes corporate charges allocated by Terex of (a) $1.1 million for the
       five months ended December 31, 1992;  (b) $4.4 million,  $8.5 million and
       $7.0  million  in the  years  ended  December  31,  1993,  1994 and 1995,
       respectively;  and (c) $5.7  million in the  eleven  month  period  ended
       November  26,  1996.  Also  includes  severance  and exit charges of $6.7
       million and $3.5  million in the years ended  December 31, 1994 and 1995,
       respectively.

(2)    Calculated as net trade receivables plus net inventories less trade
       payables.

(3)    Prior to  August 1,  1992,  the  Company  was  included  as part of CEC's
       consolidated financial statements.  CEC did not allocate any indebtedness
       to the predecessor,  and the amounts of long-term  obligations as of July
       31, 1992 do not include any such  indebtedness.  The amounts of long-term
       obligations  as of December  31,  1993,  1994 and 1995,  and November 26,
       1996,  include  Due to  Parent of $40.2  million,  $68.5  million,  $87.6
       million and $96.4  million,  respectively;  such amounts also include the
       long-term portion of capital lease obligations. At December 31, 1996, the
       amount of long-term  obligations includes the Notes and the long-term
       portion of capital lease obligations.
</FN>
</TABLE>

                                     - 10 -
<PAGE>


Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

General

         CLARK is a leading international designer, manufacturer and marketer of
a complete line of forklift trucks, which it markets through a global network of
285 dealers.  CLARK's large installed  base,  which  management  estimates to be
approximately  350,000 units in operation  worldwide,  provides for  substantial
ongoing replacement parts sales, which typically generate  significantly  higher
gross  margins  than  new  product  sales.  CLARK's  North  American  operations
generally  account  for  approximately  70% of its net sales  and  CLARK  Europe
accounts for the remaining 30%.

         CLARK  experienced  operating losses of $28.6 million and $14.0 million
for the years ended December 31, 1993 and 1994, respectively.  These losses were
largely due to high operating  expenses and cash constraints.  Since 1993, CLARK
has undertaken a series of initiatives aimed at reducing fixed costs, developing
a largely  variable cost  structure  and  maximizing  the  Company's  ability to
respond  to market  changes.  These  initiatives  involved  (i)  elimination  of
redundant manufacturing and distribution facilities,  (ii) head-count reductions
involving termination of over 600 employees,  representing  approximately 40% of
the Company's  workforce,  (iii) elimination of non-core,  unprofitable  product
lines  and  (iv)  greater   reliance  on   outsourcing.   In  addition  to  cost
rationalization, the Company has redesigned a significant portion of its product
portfolio.  The Company's new and  redesigned  products have earned higher gross
margins due to their lower production costs.

         The  Company's  products are sold in more than 50 countries  worldwide.
Accordingly,  a substantial portion of the sales of the Company are generated in
foreign  currencies,  while  the  costs  associated  with  these  sales are only
partially incurred in the same currencies. Consequently, the Company's financial
performance and results of operations are affected by  fluctuations  between the
U.S.  dollar and such foreign  currencies.  In addition,  currency  fluctuations
could improve the competitive  position of the Company's foreign  competitors if
the value of the U.S.  dollar rises in relation to the local  currencies of such
competitors.  The risks  associated  with operating in foreign  countries  could
adversely affect the Company in the future.

         Sales  of  products   manufactured   and  sold  by  the  Company   have
historically been subject to substantial  cyclical  variation based, among other
things, on general economic  conditions.  The Company experienced a softening in
the demand for forklift  trucks in North  America and Europe  during 1996. It is
expected  that  there  will  be a  further  decline  in  such  demand  in  1997,
particularly  in  Europe,  with  a  modest  improvement  thereafter.  Management
believes that the Company has improved its ability to sustain  profitability  in
changing  market  conditions.  There  can be no  assurance,  however,  as to the
magnitude or timing of any decline or recovery,  or that any future decline will
not have a material adverse effect on the Company's business.

                                     - 11 -

<PAGE>


Results of Operations
<TABLE>
<CAPTION>
                                Year Ended December 31,
                         -------------------------------------  Eleven Months Ended    One Month Ended
                                1994               1995          November 26, 1996    December 31, 1996
                         ------------------  -----------------   ------------------   -----------------
                            ($)       (%)      ($)       (%)       ($)         (%)       ($)        (%)

                                                      (dollars in millions)

<S>                      <C>         <C>     <C>        <C>      <C>        <C>       <C>         <C>
Net Sales ............   $  472.7    100.0%  $  528.8   100.0%   $  404.6   100.0%    $  46.8     100.0%
Gross Profit .........       42.9      9.1%      44.7     8.5%       45.9    11.3%        4.9      10.5%
Engineering, Selling
  and Administrative
  Expenses............       41.7      8.8%      31.2     5.9%       27.0     6.7%        3.0       6.4%
Income (Loss) from
  Operations (1)......      (14.0)    (3.0%)      3.1     0.6%       13.3     3.3%        1.9       4.0%

<FN>
----------

(1) Includes  corporate  charges  allocated  to the  Company  by  Terex  of $8.5
    million,  $7.0 million and $5.7 million in the years ended December 31, 1994
    and 1995 and the eleven months ended November 26, 1996,  respectively.  Also
    includes  severance and exit charges of $6.7 million and $3.5 million in the
    years ended December 31, 1994 and 1995, respectively.
</FN>
</TABLE>


Eleven Months Ended November 26, 1996 Compared to Year Ended December 31, 1995

Net Sales

         Net sales were $404.6  million for the eleven months ended November 26,
1996 compared to $528.8  million for the twelve month period in 1995, a decrease
of $124.2 million or 23.5%. This decrease was primarily due to reduced demand by
CLARK's  customers,  which  management  believes  was related to lower  industry
activity beginning in the last quarter of 1995. Net truck sales decreased $112.6
million, or 26.0%, primarily due to a softening in the demand for lift trucks in
North America and Europe,  while parts sales declined 12.1%. CLARK derived 68.8%
and 31.2% of its net sales from its North American  operations and CLARK Europe,
respectively,  in the eleven months ended November 26, 1996, and 69.3% and 30.7%
respectively, in the twelve months ended December 31, 1995.

Gross Profit

         Gross profit increased $1.2 million,  or 2.7%, to $45.9 million for the
eleven months ended November 26, 1996,  compared to $44.7 million for the twelve
month period in 1995, despite the 23.5% decline in net sales. As a percentage of
net sales,  gross profit was 11.3% and 8.5% for the eleven months ended November
26,  1996 and the twelve  month  period of 1995,  respectively.  Cost  reduction
efforts and production improvements accounted for most of this increase. Factory
overhead expenses were reduced by $13.8 million.  Of this amount,  $10.1 million
was attributable to lower salaries,  wages and benefits. Other significant areas
of cost decreases  included lower product  liability costs,  lower freight costs
and lower  material costs from improved  outsourcing.  These  improvements  were
partially  offset by lower  absorption  of fixed  costs due to lower  production
levels and by lower  margins  for  aftermarket  parts due to a change in product
mix.

                                     - 12 -
<PAGE>


Engineering, Selling and Administrative Expenses

         For the eleven months ended November 26, 1996, engineering, selling and
administrative  expenses  decreased  $4.2  million to $27.0  million  from $31.2
million  for  the  twelve   month   period  in  1995,   primarily   due  to  the
rationalization  of staff  levels,  facilities  and support costs in response to
lower industry activity.  Engineering,  selling and administrative expenses as a
percentage of net sales were 6.7% and 5.9% in the eleven  months ended  November
26, 1996 and twelve months ended December 31, 1995, respectively.

Income (Loss) from Operations

         Income from operations increased $10.2 million to $13.3 million for the
eleven months ended  November 26, 1996,  compared to $3.1 million for the twelve
months ended December 31, 1995. In addition, CLARK had $3.5 million of severance
and  exit  charges  related  to  workforce  rationalization  in  Europe  and the
termination  of  certain  leases,  in 1995  which did not  recur in 1996.  Terex
allocated  corporate  charges to CLARK of $5.7  million and $7.0  million in the
1996 and 1995 periods.  Income (loss) from operations  expressed as a percentage
of net sales was 3.3% and 0.6% for the eleven months ended November 26, 1996 and
the twelve months ended December 31, 1995, respectively.

Month ended December 31, 1996

         The  acquisition  of the Company on November  26,  1996  resulted in a
significant  change in the Company's  capital structure and a revaluation of the
Company's  assets and  liabilities in accordance with the provisions of purchase
accounting  required by generally accepted accounting  principles.  Accordingly,
the  results of  operations  for the month  ended  December  31,  1996,  are not
comparable  to the  results of  operations  for the eleven  month  period  ended
November 26, 1996 or the years ended December 31, 1995 and 1994.

         Net sales for the month of December totaled $46.8 million, which was in
line with management's expectations.  Cost of sales was $41.9 million, resulting
in a gross margin of 10.5%.  In December  1996,  parts sales as a percentage  of
total net sales  declined.  This mix change  resulted  in a lower  gross  margin
percentage as compared to the previous  eleven months.  Dealer  positioning  for
year-end  inventory  levels was felt to be one of the  reasons for the change in
product  mix.  Engineering,  selling and  administrative  expenses  totaled $3.0
million for the month  ending  December  31,  1996,  or 6.4% of net sales.  This
percentage differs from previous periods because sales for the month of December
were at a higher  level  then the  previous  eleven  months  while  engineering,
selling and  administrative  expenses were slightly  higher but did not increase
proportionally.

Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended
December 31, 1994

Net Sales

         Net sales were $528.8  million in 1995, an increase of $56.1 million or
11.9% from $472.7 million in 1994. Truck sales increased $50.5 million and parts
sales  increased 6.2%. The increase in truck sales was primarily due to improved
market  conditions  for most of 1995,  more efficient  manufacturing  operations
during 1995 and shipments of the new Genesis(TM)  line of IC trucks,  introduced
in December 1994. The light IC forklift market,  in which this product competes,
represents  approximately 60% of the rider forklift truck industry.  Parts sales
increased 6.2% because of improved parts inventory  availability,  the impact of
which was  partially  offset by the  adverse  effects of a labor  dispute at the
Southaven  Facility,  the  primary  effect of which  occurred in March and April
1995.  CLARK  derived  71.6%  and  28.4% of its net sales in 1995 from its North
American  operations  (which  include  sales  of  trucks  manufactured  in Korea
primarily for sale in North America) and CLARK Europe, respectively, compared to
74.8% and 25.2%, respectively, in 1994.

                                     - 13 -
<PAGE>


Gross Profit

         Gross profit increased $1.8 million to $44.7 million in 1995 from $42.9
million in 1994.  As a percentage  of net sales,  gross profit was 8.5% and 9.1%
for 1995 and 1994, respectively. Favorable efficiencies due to higher production
and sales volumes, combined with the effects of 1994 severance actions, resulted
in this gross profit increase.  This increase was partially offset by additional
costs  associated  with the  commencement  of production of the new  Genesis(TM)
product line and manufacturing  inefficiencies  arising from the difficulties in
key suppliers meeting CLARK's demand requirements.

Engineering, Selling and Administrative Expenses

         Engineering,  selling and  administrative  expenses  decreased by $10.5
million to $31.2  million for 1995 from $41.7  million for 1994,  primarily as a
result of severance  actions taken by management during the second half of 1994.
As a  consequence  of such action,  staff  levels  primarily  for CLARK's  North
American  operations  were reduced  resulting in savings of  approximately  $3.0
million for the year ended December 31, 1995.  Promotional expenses and facility
costs  were  also  reduced   during  this  period.   Engineering,   selling  and
administrative  expenses  expressed as a percentage of sales were 5.9% and 8.8%,
respectively, in 1995 and 1994, respectively.

Income (Loss) from Operations

         Income from  operations  increased  $17.1  million from a $14.0 million
loss from  operations  for the year ended  December 31, 1994 to $3.1 million for
the year ended  December  31,  1995.  In  addition  to the  increased  sales and
manufacturing  efficiencies  noted above, the increase in income from operations
was due in part to a $3.3 million reduction in severance, legal and exit charges
and a $1.5 million  reduction in corporate  charges allocated in 1995 from 1994.
CLARK  incurred  $3.5 million of  severance  charges in 1995 as compared to $6.7
million of such charges in 1994. In 1994, CLARK implemented personnel reductions
in plant  supervision,  engineering,  marketing and  administration in its North
American  and  European  operations.  In addition,  in 1994,  CLARK  implemented
additional  personnel  reductions in conjunction  with the closing of the Korean
plant  and a certain  branch  sales  office  in  France.  Terex  also  allocated
corporate  charges to CLARK of $7.0 million and $8.5 million for the years ended
December 31, 1995 and 1994,  respectively.  Income  (loss) from  operations as a
percentage  of net sales was 0.6% and (3.0)% for the years  ended  December  31,
1995 and 1994, respectively.

Backlog

         The Company's backlog orders at December 31, 1996 and December 31, 1995
were $80.4 million and $78.9  million,  respectively.  Substantially  all of the
Company's  backlog  orders are expected to be filled  within one year,  although
there can be no assurance  that all such orders will be filled  within that time
period.  The  cancellation  or delay of  certain  orders  could  have a material
adverse effect on the Company.

Capital Resources, Liquidity and Financial Condition

         The Company's  business is capital  intensive and requires  funding for
purchases of production and replacement parts inventories,  capital expenditures
for  repair,  replacement  and  upgrading  of  existing  facilities  as  well as
financing of accounts  receivables from customers and dealers.  The Company will
continue to have  significant debt service  requirements.  On December 31, 1996,
the  Company  had $17.6  million of cash,  cash  equivalents  and cash  securing
letters of credit,  $130.0  million  of debt and $6.0  million of capital  lease
obligations.  The Company's ability to incur additional indebtedness is somewhat
restricted by the covenants set forth in the Company's borrowing arrangements.

         In  connection  with  the  Acquisition,  the  Company  entered  into  a
Revolving  Credit Facility with Congress  Financial  Corporation.  The Revolving
Credit Facility has an aggregate undrawn availability of $30.0 million,  subject
to the borrowing conditions  contained therein.  Management believes that it has
adequate  available  borrowing  capacity under the Revolving  Credit Facility to
cover its foreseeable working capital requirements.

                                     - 14 -
<PAGE>


         The Company had $3.2 million and $0.3 million of capital  expenditures,
including  tooling  and new  product  development  expenditures,  for the eleven
months  ending  November  26, 1996 and the one month ended  December  31,  1996,
respectively. This compares to $5.3 million in capital expenditures in 1995. The
Company believes that its operating cash flow and borrowing  availability  under
the Revolving  Credit Facility will be sufficient to cover its near term capital
requirements.

         As of  December  31,  1996,  the Company  was not in  violation  of any
covenants or  restrictions  in the  Revolving  Credit  Facility or the indenture
governing the Notes.

Contingencies, Commitments and Uncertainties

         CLARK is contingently  liable as a guarantor for certain customer floor
plan obligations with financial  institutions  pursuant to which it is obligated
to purchase  repossessed  new and unused  equipment  based upon the  unamortized
principal balance outstanding. Management estimates that the guarantee under the
floor plan  obligations  aggregated  approximately  $25 million at December  31,
1996.  Historically,  the Company has incurred only minimal  losses  relating to
these arrangements.

         CLARK is  contingently  liable  for a portion of the  related  value of
machines  sold to and  leased  by a third  party to users  for  terms  generally
ranging from three to five years.  CLARK  repurchases  certain  machines  leased
under this  program and then sells or leases such  machines to other  users.  At
December  31,  1996,  the maximum  contingent  liability  under this program was
approximately $11 million.  CLARK has historically  recorded profits on the sale
of repurchased machines.

         Pursuant  to  certain  dealer  sales  agreements,  CLARK has  agreed to
repurchase  certain new and unused  equipment in the event of the termination of
the dealer.  Similar repurchase obligations exist under certain dealer operating
agreements  in the event of the dealer's  default  under the dealer's  financing
agreements with financial institutions.  CLARK has historically incurred minimal
losses from the foregoing arrangements.

         For additional information on contingencies and uncertainties, see Note
J to the  Company's  consolidated  financial  statements  included  under  "Item
8--Financial Statements and Supplementary Data."

Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Consolidated  Financial  Statements of the Company,  along with the
Report of  Independents  Accountants,  is included on pages F-1 through  F-20 of
this Form 10-K.

         Supplementary  data called for by this item is not  presented  as it is
not applicable to the registrant.

Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

         None.

                                     - 15 -
<PAGE>



                                    PART III

Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth certain  information with respect to the
persons who are members of the Board of Directors  or executive  officers of the
Company.  Directors  serve for a term of one year or until their  successors are
elected  and  qualified;  officers  serve  at the  discretion  of the  Board  of
Directors.

                  Name               Age               Position
                  ----               ---               --------

          Dr. Martin M. Dorio......   51   President, Chief Executive Officer
                                           and Director
          Dr. J. Frithjof Timm.....   54   Managing Director and President,
                                           CLARK Europe
          Joseph F. Lingg..........   51   Vice  President, Finance and Human
                                           Resources and Treasurer
          Kevin M. Reardon.........   52   Vice President, Sales and Marketing,
                                           North America
          Michael J. Grossman......   46   Vice President, General Counsel and
                                           Secretary
          Jeffrey J. Kirk..........   49   Vice President, Purchasing
          Thomas J. Snyder.........   51   Director
          Diether Klingelnberg.....   52   Director
          Michael A. Delaney.......   42   Director
          James A. Urry............   42   Director

          Dr. Martin M. Dorio, President,  Chief Executive Officer and Director.
Dr.  Dorio  joined the  Company in June 1995 as  President  and Chief  Executive
Officer.  From 1990 until he joined the  Company,  Dr.  Dorio  served in various
positions with Case  Corporation,  a manufacturer  of tractors and  construction
equipment,  including Vice President,  Corporate  Planning and Development.  Dr.
Dorio has over 20 years of  experience  in  manufacturing  and has served in key
management positions of FMC Corp. and General Electric Co.

          Dr. J. Frithjof Timm,  Managing Director and President,  CLARK Europe.
Dr. Timm joined the Company in May 1995 as Managing  Director  and  President of
CLARK Europe.  From 1992 to 1995, he was President of Komatsu  Europe and, prior
to  that,  he was  Managing  Director  of Sales of the  Hydraulic  Mobile  Crane
Division of Krupp A.G.

          Joseph  F.  Lingg,  Vice  President,   Finance,  Human  Resources  and
Treasurer.  Mr.  Lingg  joined the  Company in January  1996 as Vice  President,
Finance and  Treasurer.  In 1995,  Mr. Lingg served as Vice  President and Chief
Financial Officer of RBC Company of America, a manufacturer of bearings, and for
more than five  years  prior  thereto  he  served  as Vice  President  and Chief
Financial  Officer of Mosler  Inc.,  a  manufacturer  and  servicer  of security
products.

          Kevin M. Reardon, Vice President,  Sales and Marketing, North America.
Mr.  Reardon joined the Company in 1984 and has been Vice President of Sales and
Marketing,  North America since 1995. Previously, Mr. Reardon served as Director
of Marketing and National Sales Manager for the Company.

          Michael J. Grossman,  Vice  President,  General Counsel and Secretary.
Mr. Grossman joined the Company in 1985 as Assistant General Counsel. Since 1991
he has served as Vice President,  General Counsel and Assistant Secretary of the
Company.

          Jeffrey J. Kirk,  Vice  President,  Purchasing.  Mr.  Kirk  joined the
Company in 1995 as Vice  President  of Human  Resources  and  Purchasing  of the
Company.  From  1993 to 1994,  Mr.  Kirk  was a  consultant  in Human  Resources
Management,  and from 1988 to 1993, he was Vice President of Human Resources and
an officer of OHM Corporation, an environmental remediation firm.

          Thomas J.  Snyder,  Director.  Mr.  Snyder has been  President,  Chief
Operating Officer and a director of Delco Remy  International,  Inc. since 1994.
From 1962 to 1994,  Mr. Snyder held several  executive  positions with the Delco
Remy Division of General Motors,  most recently as Product  Manager,  Heavy Duty
Systems. He is also a director of St. John's Health Systems.

                                     - 16 -
<PAGE>


          Diether  Klingelnberg,  Director.  Mr.  Klingelnberg  served  as Chief
Executive  Officer of  International  Knife & Saw,  Inc.  until March  1996.  In
addition,  he served as Chairman of the Board and Chief Executive Officer of IKS
Corporation  from 1979  until  November  1996.  Mr.  Klingelnberg  is  currently
Managing Director of Klingelnberg  Beteillgungs-GmbH and is a director of Honsel
AG, IKS Corporation and the Alfred H. Schulte Company.

          Michael A. Delaney, Director. Mr. Delaney has been a Vice President of
CVC since  1989.  From 1986  through  1989,  he was Vice  President  of Citicorp
Mergers and Acquisitions.  Mr. Delaney is a director of Aetna Industries,  Inc.,
AmeriSource  Health  Corporation,   Ballentray  Corp.,  CORT  Business  Services
Corporation,  Delco  Remy  International,   Inc.,  Enterprise  Media  Inc.,  GVC
Holdings,  IKS  Corporation,  JAC  Holdings,  Palomar  Technologies,   Inc.,  SC
Processing, Inc., and Triumph Holdings, Inc.

          James A. Urry, Director.  Mr. Urry has been with Citibank,  N.A. since
1981,  serving as a Vice  President  since 1986. He has been a Vice President of
CVC since  1989.  He is a  director  of  AmeriSource  Health  Corporation,  CORT
Business  Services  Corporation,  Hancor Holding  Corporation,  IKS Corporation,
Recreational Vehicle Products and York International Corporation.

Director Compensation and Arrangements

         It is not  currently  contemplated  that  directors of the Company will
receive  compensation  for their services as directors.  Members of the Board of
Directors are elected  pursuant to certain voting  agreements among Holdings and
its  stockholders.  See "Item 12 --  Security  Ownership  of Certain  Beneficial
Owners and Management--The Stockholders' Agreement."


Item 11 -- EXECUTIVE COMPENSATION

         The  compensation  of  executive   officers  of  the  Company  will  be
determined  by the Board of  Directors of the  Company.  None of the  historical
benefit or  compensation  plans of Terex are described  herein because they were
not  assumed by the  Company in  connection  with the  Acquisition.  The Company
intends to adopt a 401(k)  retirement  plan and an employee stock purchase plan.
See "-- 401(k) Plan" and "Item 12 -- Security  Ownership  of Certain  Beneficial
Owners and Management--Employees Stock Purchase Plan."

         The  following  table sets forth  certain  information  concerning  the
compensation  received by the Chief  Executive  Officer and the four most highly
compensated officers of the Company for services rendered in 1996.

                                     - 17 -
<PAGE>

<TABLE>
<CAPTION>
                           Summary Compensation Table

                                                                                  Long Term Compensation
                                                Annual Compensation                       Awards
                                       --------------------------------------    --------------------------
                                                                     Other       Restricted         Stock
                                                                    Annual          Stock          Options       All Other
                                        Salary         Bonus     Compensation     Awards(1)      (# Shares)   Compensation(2)
                                        ------         -----     ------------     ---------      ----------   ---------------

<S>                                    <C>               <C>           <C>            <C>            <C>        <C>
Dr. Martin M. Dorio.................   $202,083          --            --             --             --         $   37,807
President and Chief Executive
Officer

Dr. J. Frithjof Timm................    208,333          --            --             --             --             67,225
President, CLARK Europe(3)

Kevin M. Reardon....................    112,500          --            --             --             --             80,727
Vice President of Sales and
Marketing

Michael J. Grossman.................    117,501          --            --             --             --             83,817
Vice President and General Counsel

Jeffrey J. Kirk.....................    112,875          --            --             --             --             81,659
Vice President, Purchasing

<FN>
_______________________

(1) No awards of Terex restricted stock were made in 1996. Based upon a price of
    $9.875  per  share,  the  price at which  Terex  has  agreed  to  repurchase
    restricted  stock, the aggregate  holdings and valuation of Terex restricted
    stock held by each of the named executive officers on December 31, 1996 were
    as follows: for Dr. Dorio, 12,500 shares (of which 3,125 were vested) valued
    at $123,438; for Dr. Timm, 2,500 shares (of which 625 were vested) valued at
    $24,688;  for each of Messrs.  Reardon and Grossman,  1,000 shares (of which
    500 were vested) valued at $9,875;  and for Mr. Kirk, 1,000 shares (of which
    250 were vested)  valued at $9,875.  Dividends are payable only with respect
    to shares which have vested.

(2) Includes,  for each  officer,  a one-time  bonus paid by Terex in connection
    with the  Acquisition,  Company  401(k)  contributions  and group  term life
    insurance premiums,  respectively,  as follows: Dr. Dorio, $229,751,  $4,750
    and $3,306; Dr. Timm, $67,225, $0 and $0; Mr. Reardon,  $75,752,  $3,612 and
    $1,363; Mr. Grossman,  $79,040,  $3,562 and $1,215;  and Mr. Kirk,  $76,081,
    $3,006 and $2,573.

(3) Dr.  Timm's  salary and bonus are  calculated  from  Deutsche  Marks using
    a conversion rate of 1.5 DM/$.
</FN>
</TABLE>

Fiscal Year-End Option Values

         No options on Terex  stock were  granted to any of the named  executive
officers  in  1996,  and no  previously  granted  options  were  exercised.  The
following table sets forth the number of shares  underlying both exercisable and
unexercisable  options  on common  stock of Terex  held by the  named  executive
officers as of December 31, 1996.

                                           Number of Shares
                                          Underlying Options        Value of
                                      ---------------------------  Unexercised
                                      Exercisable   Unexercisable   Options(1)
                                      -----------   -------------   ----------

         Dr. Martin M. Dorio             6,250          18,750        $98,438
         Dr. J. Frithjof Timm            1,000           4,000         17,750
         Kevin M. Reardon...             1,000           3,000         21,500
         Michael J. Grossman             1,000           5,000         32,750
         Jeffrey J. Kirk....               500           5,500         30,500


_______________

(1) Unexercisable  options are valued at the excess of $9.875 over the  exercise
    price per share, the cash out price agreed with Terex;  exercisable  options
    are valued at the excess of  $10.125,  the  closing  market  price for Terex
    stock on  December  31,  1996,  over the  exercise  price  per share for the
    option.


                                     - 18 -
<PAGE>


Employment Agreement

         Concurrently with the consummation of the Acquisition, Holdings entered
into a three-year employment contract with Dr. Martin M. Dorio pursuant to which
Dr. Dorio is employed as the President and Chief  Executive  Officer of Holdings
and the Company.  The agreement  provides for an annual base salary of $225,000,
which is subject to annual merit increases, and an annual performance bonus. The
Company has agreed that,  in the event that  Holdings is unable to pay Dr. Dorio
any amounts due to him with respect to annual bonuses, the Company will pay such
amounts.  In addition,  the  agreement  provides for the receipt by Dr. Dorio of
standard  company  benefits.  The  agreement is  terminable  by Holdings with or
without  cause.  In the event the agreement is terminated  without cause or as a
result of the total  disability  of Dr.  Dorio,  Dr.  Dorio will be  entitled to
continue to receive his base salary and certain  other  benefits  for  specified
periods. Following any termination of Dr. Dorio's employment, he will be subject
to a non-competition covenant for up to two years.

401(k) Plan

         The Company  intends to adopt a qualified  401(k)  retirement  plan for
certain of its employees who were entitled to participate in a 401(k) retirement
plan maintained by Terex prior to the Acquisition.  Subject to certain statutory
limitations, eligible employees will be able to contribute a percentage of their
compensation to the plan on a pre-tax basis  ("elective  deferrals").  For 1996,
the maximum amount of elective  deferrals that could be made by any employee was
$9,500.  Employees  are fully vested in their  elective  deferrals at all times.
Generally,  employees may not receive a distribution  of their account  balances
prior to their death, disability,  termination of employment or retirement,  and
their account balances cannot be assigned or alienated.

Compensation Committee Interlocks and Insider Participation

         Although  the Company has no  compensation  committee,  each of Messrs.
Snyder,  Klingelnberg,  Delaney and Urry  participated in  deliberations  of the
Board of Directors concerning executive compensation.

Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         All of the outstanding  capital stock of the Company is currently owned
by Holdings.  The following table sets forth certain information with respect to
the beneficial  ownership of the Holdings  Preferred  Stock and Holdings  Common
Stock by (i) each person or entity who owns five percent or more  thereof,  (ii)
each  director of the Company who is a  stockholder,  (iii) the Chief  Executive
Officer of the Company and the other  executive  officers  named in the "Summary
Compensation  Table"  above who are  stockholders,  and (iv) the  directors  and
officers of the Company as a group. Unless otherwise  specified,  all shares are
directly held.

                                     - 19 -

<PAGE>
<TABLE>
<CAPTION>
                                                     Number and Percent of Shares
                                --------------------------------------------------------------------
                                        Holdings
                                        Preferred          Holdings Class A     Holdings Class B
                                          Stock                Stock(1)             Stock(2)
                                --------------------   --------------------   ---------------------
   Name of Beneficial Owner       Number     Percent     Number     Percent    Number      Percent
   ------------------------       ------     -------     ------     -------    ------      -------
<S>                             <C>            <C>     <C>            <C>     <C>              <C>
Citicorp Venture Capital Ltd    15,953.3       94.0%   134,211.0      49.1%   717,550.5        98.8%
   399 Park Avenue
   New York, New York  10043
Dr. Martin M. Dorio (3)            404.8        2.4%    55,180.7      20.2%       --           --
   172 Trade Street
   Lexington, Kentucky  40511
Dr. J. Frithjof Timm               130.1        0.8%    19,879.5       7.3%       --          --
   172 Trade Street
   Lexington, Kentucky  40511
Kevin M. Reardon                    37.1        0.2%     5,391.6       2.0%       --          --
Michael J. Grossman                 68.4        0.4%     6,566.3       2.4%       --          --
Jeffrey T. Kirk                     54.0        0.3%     6,024.1       2.2%       --          --
Thomas J. Snyder                     --         --       5,000.0       1.8%       --          --
Diether Klingelnberg                 --         --          42.0       0.02%   8,943.5          1.2%
All directors and officers as
    a group (10 persons) (3)       734.9        4.3%   103,602.3      37.9%    8,943.5          1.2%
<FN>
----------

(1) Does not include shares of Holdings  Class A Stock issuable upon  conversion
    of Holdings  Class B Stock.  See  "--Holdings  Common  Stock."  Assuming the
    conversion  of all of a  holder's  shares  of  Holdings  Class B Stock  into
    Holdings  Class A Stock,  but no such  conversion  by any  other  holder  of
    Holdings  Class B Stock,  the number of shares and the  percentage  of total
    Holdings  Class A Stock held by the  converting  holder would be as follows:
    for CVC,  851,761.5 and 86.0%; for Diether  Klingelnberg,  8,985.5 and 3.2%;
    and for all directors and officers as a group, 112,545.8 and 39.8%.

(2) Does not include shares of Holdings  Class B Stock issuable upon  conversion
    of Holdings  Class A Stock.  See  "--Holdings  Common  Stock."  Assuming the
    conversion  of all of a  holder's  shares  of  Holdings  Class A Stock  into
    Holdings  Class B Stock,  but no such  conversion  by any  other  holder  of
    Holdings  Class A Stock,  the number of shares and the  percentage  of total
    Holdings  Class B Stock held by the  converting  holder would be as follows:
    for CVC,  851,761.5 and 99.0%;  for Dr. Martin M. Dorio,  55,180.7 and 7.1%;
    for Dr. J. Frithjof Timm,  19,879.5 and 2.7%; for Kevin M. Reardon,  5,391.6
    and 0.7%;  for Michael J.  Grossman,  6,566.3 and 0.9%; for Jeffrey T. Kirk,
    6,024.1  and 0.8%;  for  Thomas J.  Snyder,  5,000  and  0.7%;  for  Diether
    Klingelnberg,  8,985.5 and 1.2%;  and for all  directors  and  officers as a
    group, 103,602.3 and 12.5%.

(3) Certain  members of the Company's  management are expected to participate in
    an Employee Stock Purchase Plan pursuant to which management will be offered
    the  opportunity to acquire  Holdings Class A Stock which would equal in the
    aggregate  up  to  an  additional  10.0%  of  the  Holdings  Class  A  Stock
    outstanding.  The table does not  include  any such  securities  that may be
    acquired.
</FN>
</TABLE>

Holdings Common Stock

         The Certificate of Incorporation of Holdings provides that Holdings may
issue  2,500,000  shares of  Holdings  Common  Stock,  divided  into two classes
consisting  of  1,250,000  shares of  Holdings  Class A Stock and  1,250,000  of
Holdings  Class B Stock.  The holders of Holdings  Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders.  Except as required by law, the holders of Holdings  Class B Stock
have no voting rights.  Under the Certificate of  Incorporation  of Holdings,  a
holder of either  class of Holdings  Common  Stock may convert any or all of his
shares  into an equal  number of shares of the other  class of  Holdings  Common
Stock;  provided that in the case of a conversion  from Holdings  Class B Stock,
which is nonvoting,  into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of  Holdings  Class A stock  which  would be held after  giving
effect to the conversion.

The Stockholders' Agreement

         Pursuant to the a  Securities  Purchase and Holders  Agreement  entered
into among the  stockholders of Holdings (the  "Stockholders'  Agreement"),  the
Board of Directors of Holdings and the Company shall be composed at all times of
five directors as follows: the President of the Company, Dr. Martin M. Dorio (so
long as he continues to serve as President);  two individuals designated by CVC;
and two additional  directors who shall not be employees of CVC but who shall be
designated  by CVC,  subject  to the right of  holders  of the  majority  of the
outstanding  shares of Holdings  Class A Stock to veto the election of either of
such additional directors.
                                     - 20 -
<PAGE>


         The  Stockholders'  Agreement  contains certain  provisions which, with
certain  exceptions,  restrict the ability of the stockholders from transferring
any Holdings  Common  Stock,  Holdings  Preferred  Stock or Holdings  Debentures
except pursuant to the terms of the Stockholders' Agreement. So long as Holdings
has not  consummated  a public  offering of Holdings  Common Stock  resulting in
aggregate  net proceeds of $30.0  million or more, if holders of at least 50% of
the Holdings Common Stock then outstanding approve the sale of the Company, each
stockholder  has agreed to consent to such sale and, if such sale  includes  the
sale of stock,  each  stockholder  has agreed to sell all of such  stockholder's
Holdings  Common  Stock on the terms and  conditions  approved  by  holders of a
majority of the Holdings  Common Stock then  outstanding.  In the event Holdings
proposes  to issue  and sell  (other  than in a public  offering  pursuant  to a
registration  statement)  any shares of Holdings  Common Stock  and/or  Holdings
Preferred  Stock or any securities  containing  options or rights to acquire any
shares  of  Holdings  Common  Stock  and/or  Holdings  Preferred  Stock  or  any
securities  convertible  into Holdings  Common Stock and/or  Holdings  Preferred
Stock to CVC or its corporate  affiliates,  Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
are not applicable in certain circumstances  including the issuance of shares of
Holdings  Common Stock and/or  Holdings  Preferred  Stock upon the conversion of
shares of one class of Holdings  Common Stock and/or  Holdings  Preferred  Stock
into shares of the other class or upon an initial public offering.

         The  Stockholders'  Agreement  also  provides  for  certain  additional
restrictions on transfer of shares by Management Investors,  including the right
of  Holdings  to  repurchase  shares  upon  termination  of  such  stockholder's
employment  prior to 2001, at a formula price, and the grant of a right of first
refusal  in favor of  Holdings  in the  event a  Management  Investor  elects to
transfer shares of Holdings Common Stock.

Registration Rights Agreement

         In  connection  with  their  entry  into the  Stockholders'  Agreement,
Holdings,  CVC,  Dr.  Martin  M.  Dorio  and  Thomas J.  Snyder  entered  into a
Registration  Rights Agreement (the "Holdings  Registration  Rights Agreement").
Pursuant to the Holdings Registration Rights Agreement, upon the written request
of CVC, Holdings has agreed to (subject to certain  exceptions) prepare and file
a registration  statement with the Securities and Exchange Commission concerning
the  distribution  of all or part  of the  shares  held by CVC and use its  best
efforts to cause such registration statement to become effective. If at any time
Holdings files a registration  statement for the Holdings  Common Stock pursuant
to a request by CVC or otherwise  (other than a  registration  statement on Form
S-8, Form S-4 or any similar form, a registration  statement filed in connection
with a share exchange or an offering  solely to Holdings'  employees or existing
stockholders, or a registration statement registering a unit offering), Holdings
will  use  its  best  efforts  to  allow  the  other  parties  to  the  Holdings
Registration  Rights Agreement to have their shares of Holdings Common Stock (or
a portion of their shares under certain circumstances) included in such offering
of Holdings  Common Stock if the  registration  form  proposed to be used may be
used to register such shares.  Registration expenses of the selling stockholders
(other than underwriting  fees,  brokerage fees and transfer taxes applicable to
the shares sold by such stockholders or the fees and expenses of any accountants
or other  representatives  retained by a selling  stockholder) are to be paid by
Holdings.

Employee Stock Purchase Plan

         It is currently contemplated that Holdings will adopt an Employee Stock
Purchase  Plan   pursuant  to  which   members  of  the   Company's   management
("Participants")  will be offered the  opportunity to purchase  Holdings Class A
Stock. The  Participants  will be given the opportunity to acquire or be granted
options to acquire an aggregate of up to 10.0% of Holdings  Class A Common Stock
outstanding on a fully-diluted basis.

Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Service Agreement

         In connection with the Acquisition,  the Company entered into a service
agreement  (the "Service  Agreement")  with Terex  pursuant to which the Company
shares space in the Southaven  Facility with the Terex  Distribution  Center,  a
division of Terex ("TDC").  In addition,  pursuant to such agreement the Company
hired  approximately  25 employees of TDC who are  responsible  for  aftermarket
customer support and administration. The Company pays an aggregate annual

                                     - 21 -
<PAGE>

fee to TDC under such agreement of approximately  $6.0 million (the "Base Fee"),
payable in monthly installments. In addition to the Base Fee, certain provisions
of the  Service  Agreement  may  require  each of TDC and  CLARK  to  share  the
responsibility  for additional  costs and savings  resulting  from,  among other
things,  changes or increases in the provision of services or the implementation
of  certain  cost  savings.  The  term  of the  agreement  is for  three  years.
Management  believes  that  the  terms  of the  Service  Agreement  are no  less
favorable  to the  Company  than  those  which  could  have been  obtained  from
non-affiliated parties at the time the agreement was entered into.

Tax Sharing Agreement

         Holdings  and the Company will be included in the  consolidated  United
States federal income tax return of Holdings.  Holdings and the Company  entered
into a tax sharing agreement (the "Tax Sharing  Agreement")  whereby the Company
will pay Holdings  (or Holdings  will pay the Company) its pro rata share of the
total tax liability,  as set out in the Tax Sharing Agreement.  In the event the
Company is included in a joint, combined, consolidated or unitary state or local
income or franchise tax return with Holdings, the Company shall make payments to
Holdings,  and  Holdings  shall  make  payments  to  the  Company,  in a  manner
consistent with that described above for federal tax purposes.

License Agreement

         In connection with the Acquisition,  Holdings  acquired certain patents
and patent applications  related to the Company's business from Terex.  Pursuant
to a License  Agreement dated as of November 27, 1996,  Holdings  granted to the
Company a perpetual, world-wide,  exclusive royalty-free,  fully-paid-up license
to  practice  methods,  and to make,  use,  import,  offer  for sale or sell any
products, covered by such patents and patent applications.

Other

         Effective  as  of  January  31,  1997,  Holdings   repurchased  certain
outstanding shares of Holdings Preferred Stock and Holdings Class B Stock having
an aggregate value of  approximately  $1.1 million from CVC and,  simultaneously
therewith,  issued and sold  shares of  Holdings  Preferred  Stock and  Holdings
Common Stock having an equivalent value to Dr. Martin M. Dorio, other members of
management and Diether Klingelnberg. In connection therewith, the Company loaned
Dr. Dorio $200,000 toward the purchase price of the securities acquired by him.
Such loan is evidenced by a demand promissory note which does not bear interest.

                                     - 22 -
<PAGE>


                                     PART IV

Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)   List of Financial Statements.

         -  Financial Data Schedule

         The following  Consolidated Financial Statements of the Company and the
         Report of Independent  Accountants set forth on pages F-1 through F-20
         and F-2,  respectively,  are incorporated by reference into this item
         14 of Form 10-K by item 8 hereof:

         -  See Index to Consolidated Financial Statements on page F-1.


(a)(2)   Financial Statement Schedules.

         No financial  statement  schedules  have been filed herewith since they
         are  either  not  required,   are  not  applicable,   or  the  required
         information  is  shown  in the  consolidated  financial  statements  or
         related notes.

(a)(3)   Exhibits.

Exhibit
No.       Description
---       -----------

   3.1    Certificate of Incorporation, as amended, of the Company (incorporated
          by reference to Exhibit 3.1 to the Company's Registration Statement on
          Form S-4, Registration No. 333-18957)

   3.2    By-laws of the Company  (incorporated  by  reference to Exhibit 3.2 to
          the Company's  Registration  Statement on Form S-4,  Registration  No.
          333-18957)

   4.1    Indenture dated as of November 27, 1996 between the Company and United
          States  Trust  Company  of  New  York,  as  Trustee  (incorporated  by
          reference to Exhibit 4.1 to the  Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

   4.2    Registration  Rights Agreement dated as of November 27, 1996 among the
          Company,  Jefferies  &  Company,  Inc.  and Bear,  Stearns & Co.  Inc.
          (incorporated   by   reference   to  Exhibit  4.2  to  the   Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

   4.3    Form of  103/4%  Senior  Notes  due 2006  (included  in  Exhibit  4.1)
          (incorporated   by   reference   to  Exhibit  4.3  to  the   Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

  10.1    Purchase   Agreement  dated  November  22,  1996  among  the  Company,
          Jefferies & Company,  Inc. and Bear, Stearns & Co. Inc.  (incorporated
          by reference to Exhibit 10.1 to the Company's  Registration  Statement
          on Form S-4, Registration No. 333-18957)

 10.2     Loan and  Security  Agreement  dated  November 27, 1996 by and between
          Congress  Financial  Corporation  and  the  Company  (incorporated  by
          reference to Exhibit 10.2 to the Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 10.3     Stock and Asset Purchase and Sale  Agreement,  dated as of November 9,
          1996 among Terex Corporation,  and certain of its subsidiaries and the
          Company  (incorporated  by reference to Exhibit 10.3 to the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.4     Service  Agreement  dated  as  of  November  27,  1996  between  Terex
          Corporation and the Company (incorporated by reference to Exhibit 10.4
          to the Company's  Registration Statement on Form S-4, Registration No.
          333-18957)

 10.5     Indemnity as to Letters of Credit,  Performance  Bonds,  Appeal Bonds,
          Guaranties,  etc.  dated  November 27, 1996 by the Company in favor of
          Terex  Corporation,  for itself and as  successor  to CMH  Acquisition
          Corp., CMH Acquisition  International  Corp.,  Clark Material Handling
          Company and Clark Material Handling International,  Inc. (incorporated
          by reference to Exhibit 10.5 to the Company's  Registration  Statement
          on Form S-4, Registration No. 333-18957)

                                     - 23 -

<PAGE>

 10.6     Employment  Agreement  dated as of November 27, 1996 between  Holdings
          and Dr. Martin M. Dorio  (incorporated by reference to Exhibit 10.6 to
          the Company's  Registration  Statement on Form S-4,  Registration  No.
          333-18957)

 10.7     Tax Sharing  Agreement  made as of November 27, 1996 between  Holdings
          and the Company  (incorporated  by  reference  to Exhibit  10.7 to the
          Company's   Registration  Statement  on  Form  S-4,  Registration  No.
          333-18957)

 10.8     Stock  Purchase  Agreement,  dated as of May 27, 1992,  by and between
          Clark  Equipment  Company  and  Terex  Corporation   (incorporated  by
          reference to Exhibit 10.8 to the Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 10.9     First Amendment to the Stock Purchase Agreement,  dated as of July 31,
          1992, by and between  Clark  Equipment  Company and Terex  Corporation
          (incorporated   by  reference   to  Exhibit  10.9  to  the   Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.10    Trademark  Assignment  Agreement,  dated as of July 31,  1992,  by and
          between Clark Equipment  Company and Clark Material  Handling  Company
          (incorporated   by  reference  to  Exhibit   10.10  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.11    Second  Amended  and  Restated  General  Operating  Agreement,   dated
          November 29, 1990, by and between Clark Material  Handling Company and
          Chase Manhattan  Leasing Company,  Inc.  (incorporated by reference to
          Exhibit  10.11 to the  Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

 10.12    Second Amendment to the Second Amended and Restated General  Operating
          Agreement,  dated April 15, 1994, by and among Clark Material Handling
          Company,   Drexel  Industries,   Inc.  and  Clark  Credit  Corporation
          (incorporated   by  reference  to  Exhibit   10.12  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.13    Third Amendment to the Second Amended and Restated  General  Operating
          Agreement,  dated  August  1,  1994,  by and  between  Clark  Material
          Handling  Company  and  Clark  Credit  Corporation   (incorporated  by
          reference to Exhibit 10.13 to the Company's  Registration Statement on
          Form S-4, Registration No. 333-18957)

 10.14    Assignment of Second Amended and Restated General Operating Agreement,
          dated March 22, 1995, by and between Clark Material  Handling Company,
          Clark Credit Corporation,  f/k/a Chase Manhattan Leasing Company,  and
          Associates  Commercial  Corporation   (incorporated  by  reference  to
          Exhibit  10.14 to the  Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

 10.15    Master  Software  License and Service  Agreement,  dated May 17, 1996,
          between  Clark   Material   Handling   Company  and  SDRC   Operations
          (incorporated   by  reference  to  Exhibit   10.15  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.16    Letter  Agreement,  dated  October 26, 1995,  between  Clark  Material
          Handling Company,  Manufacturers Distribution Services, Inc. and Maine
          Rubber  International  (incorporated  by reference to Exhibit 10.16 to
          the Company's  Registration  Statement on Form S-4,  Registration  No.
          333-18957)

 10.17    MCI  Services  Agreement,  effective  as of July 1, 1995,  between MCI
          Telecommunications  Corporation  and Clark Material  Handling  Company
          (incorporated   by  reference  to  Exhibit   10.17  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.18    Agreement for Systems Operations Services,  dated as of March 2, 1992,
          between  Clark  Material  Handling  Company  and  Integrated   Systems
          Solutions  Corporation,   as  amended  by  Amendments  #1  through  #5
          (incorporated   by  reference  to  Exhibit   10.18  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.19    Supply  Agreement,  dated  December 14, 1994,  between Clark  Material
          Handling  Company  and Funk  Manufacturing  Company  (incorporated  by
          reference to Exhibit 10.19 to the Company's  Registration Statement on
          Form S-4, Registration No. 333-18957)

 10.20    Supply Agreement,  dated July 1, 1995, between Clark Material Handling
          Company and Funk Manufacturing  Company  (incorporated by reference to
          Exhibit  10.20 to the  Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

                                     - 24 -

<PAGE>

 10.21    Supply  Agreement,  dated  January 1,  1988,  between  Clark  Material
          Systems   Technology   Company  and  HydroElectric  Lift  Trucks  Inc.
          (incorporated   by  reference  to  Exhibit   10.21  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.22    Amendment  Agreement,  dated  March 2, 1992,  between  Clark  Material
          Handling Company and HydroElectric Lift Trucks, Inc.  (incorporated by
          reference to Exhibit 10.22 to the Company's  Registration Statement on
          Form S-4, Registration No. 333-18957)

 10.23    Second Amendment  Agreement,  dated September 30, 1992,  between Clark
          Material  Handling  Company  and  HydroElectric   Lift  Trucks,   Inc.
          (incorporated   by  reference  to  Exhibit   10.23  to  the  Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.24    Agreement,  dated June 1, 1983,  between Clark  Equipment  Company and
          Mitsubishi   Corporation,   Mitsubishi  Heavy  Industries,   Ltd.  and
          Mitsubishi Motors Corporation,  as amended  (incorporated by reference
          to Exhibit 10.24 to the Company's  Registration Statement on Form S-4,
          Registration No. 333-18957)

 10.25    Master  Contract for Purchase and Sale,  dated July 17, 1995,  between
          Clark  Material  Handling  Company and Custom  Tool and  Manufacturing
          Company  (incorporated  by reference to Exhibit 10.25 to the Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.26    Supply  Agreement,  dated  December 20, 1991,  between Clark  Material
          Handling  Company and  Dixson,  Inc.  (incorporated  by  reference  to
          Exhibit  10.26 to the  Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

 10.27    Lease Agreement,  dated as of April 15, 1987,  between Vergil D. Kelly
          and Kenny  Angelucci and Clark  Equipment  Company with respect to 172
          Trade Street, Lexington, Kentucky, as amended by Amendment #1 to Lease
          dated April 15, 1987  (incorporated  by reference to Exhibit  10.27 to
          the Company's  Registration  Statement on Form S-4,  Registration  No.
          333-18957)

 10.28    Standard Form Dealer Sales Agreements  between Clark Material Handling
          Company and domestic  dealer  entities  (incorporated  by reference to
          Exhibit  10.28 to the  Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

 10.29    Agreement,  dated as of  September  12,  1995,  by and  between  Clark
          Material  Handling  Company  and Nissan  Forklift  Corporation,  North
          America  (incorporated  by reference to Exhibit 10.29 to the Company's
          Registration Statement on Form S-4, Registration No. 333-18957)

 10.30    License  Agreement dated as of November 27, 1996 between  Holdings and
          the  Company  (incorporated  by  reference  to  Exhibit  10.30  to the
          Company's   Registration  Statement  on  Form  S-4,  Registration  No.
          333-18957)

 21.1     Subsidiaries of the Company (incorporated by reference to Exhibit 12.1
          to the Company's  Registration Statement on Form S-4, Registration No.
          333-18957)

 27       Financial Data Schedule

(b) Reports on Form 8-K.

         None.


                                     - 25 -

<PAGE>



SIGNATURES


         Pursuant to the  requirements  of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                         CLARK Material Handling Company

                                         BY: /s/ Dr. Martin M. Dorio
                                             ----------------------------------
                                             Dr. Martin M. Dorio
                                             President and CEO
                                             March 27, 1997

         Pursuant to the requirements of the securities exchange act of 1934, as
amended this report has been signed below by the following  persons on behalf of
the registrant and in the capacities indicated on March 27, 1997.


       /s/ Dr. Martin M. Dorio      President, Chief Executive Officer and
       -----------------------      Director (Principal Executive Officer)
            Martin M. Dorio

       /s/ Joseph F. Lingg          Vice President, Finance Human Resources and
       -----------------------      Treasurer (Principal Financial and
            Joseph F. Lingg         Accounting Officer)


       /s/ James A. Urry            Director
       -----------------------
           James A. Urry


       /s/ Thomas J. Snyder         Director
       -----------------------
           Thomas J. Snyder


       /s/ Michael A. Delaney       Director
       -----------------------
           Michael A. Delaney



                                     - 26 -
<PAGE>



                  SUPPLEMENTAL   INFORMATION   TO  BE  FURNISHED  WITH
                  REPORTS  FILED  PURSUANT TO SECTION 15(d) OF THE ACT
                  BY REGISTRANTS WHICH HAVE NOT REGISTERED  SECURITIES
                  PURSUANT TO SECTION 12 OF THE ACT.


             The registrant has not sent the following to security holders:  (i)
       any annual  report to security  holders  covering the  registrant's  last
       fiscal year;  or (ii) any proxy  statement,  form of proxy or other proxy
       soliciting  material  with  respect  to any  annual or other  meeting  of
       security holders.




                                   - 27 -

<PAGE>



                         CLARK MATERIAL HANDLING COMPANY
                           AND PREDECESSOR BUSINESSES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES

           CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996,
               NOVEMBER 26, 1996 AND DECEMBER 31, 1995 AND FOR THE
           ONE MONTH PERIOD ENDED DECEMBER 31, 1996, THE ELEVEN MONTH
               PERIOD ENDED NOVEMBER 26, 1996 AND THE YEARS ENDED
                           DECEMBER 31, 1995 AND 1994


                                                                           Page
                                                                           ----

Report of independent accountants...........................................F-2

Consolidated balance sheet..................................................F-3

Consolidated statement of operations........................................F-4

Consolidated statement of stockholder's equity..............................F-5

Consolidated statement of cash flows........................................F-6

Notes to consolidated financial statements..................................F-7



Schedules  for which  provision  is made in the  applicable  regulations  of the
Securities   and  Exchange   Commission  are  not  required  under  the  related
instructions,  or the  information is included in the notes to the  consolidated
financial statements, or are not applicable, and therefore have been omitted.


                                       F-1

<PAGE>

















                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and
Stockholder of Clark Material
Handling Company


In our opinion, the consolidated financial statements listed in the accompanying
index on page F-1 present fairly,  in all material  respects,  the  consolidated
financial  position  of Clark  Material  Handling  Company  and its  predecessor
businesses  at December 31, 1996,  November 26, 1996 and December 31, 1995,  and
the results of their  operations  and cash flows for the one month  period ended
December 31, 1996, the eleven month period ended November 26, 1996 and the years
ended  December  31,  1995 and  1994,  in  conformity  with  generally  accepted
accounting  principles.  These financial  statements are the  responsibility  of
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for the opinion expressed above.




Price Waterhouse LLP
Cincinnati, Ohio
March 28, 1997

                                       F-2

<PAGE>

<TABLE>
<CAPTION>
Clark Material Handling Company
 and Predecessor Businesses
Consolidated Balance Sheet (in thousands)
-----------------------------------------------------------------------------------------------------------


                                                              The Company             Predecessor
                                                              ------------      ---------------------------
                                                              December 31,      November 26,  December 31,
                                                                  1996             1996          1995
                                                              ------------      -----------   ------------
Current assets
<S>                                                           <C>               <C>            <C>
   Cash and cash equivalents                                  $    16,554       $     2,060    $      819
   Cash securing letters of credit                                  1,092               956           736
   Trade  receivables  (less  allowance of $152 at
    December 31, 1996,  $2,138 at November 26, 1996
    and $2,867 at December 31, 1995)                               38,154            41,839        39,433
   Net inventories                                                 60,441            71,160        68,464
   Other current assets                                             6,255             4,472         4,660
                                                              -----------       -----------    ----------

         Total current assets                                     122,496           120,487       114,112
Long-term assets
   Property, plant and equipment-net                               51,014            51,153        58,194
   Goodwill, net of accumulated amortization of $231 at
    December 31, 1996, $1,243 at November 26, 1996 and
    $871 at December 31, 1995                                     109,311             2,766         3,138
   Other assets                                                    18,486            18,301        17,265
                                                              -----------       -----------    ----------

         Total assets                                         $   301,307       $   192,707    $  192,709
                                                              ===========       ===========    ==========

Current liabilities
   Notes payable                                              $     3,246   $   $     2,775    $      879
   Current portion of capital lease obligations                     2,407             2,404         2,414
   Trade accounts payable                                          53,562            61,596        61,535
   Accrued compensation and benefits                                5,319             4,994         4,585
   Accrued warranties and product liability                        23,383            17,764        19,012
   Other current liabilities                                        9,489             7,160         9,834
                                                              -----------       -----------    ----------

         Total current liabilities                                 97,406            96,693        98,259

Non-current liabilities
   Senior notes payable                                           130,000            -             -
   Capital lease obligations, less current portion                  3,600             3,630         4,140
   Allocated long-term debt                                        -                 51,325        51,220
   Due to parent company                                           -                 96,366        87,646
   Accrued warranties and product liability                        30,826            30,661        31,661
   Other non current liabilities                                   14,402            15,395        16,505
                                                              -----------       -----------    ----------

         Total liabilities                                        276,234           294,070       289,431
                                                              -----------       -----------    ----------
Commitments and contingencies
Stockholder's equity (deficit)
   Common stock, par value $1 per share, 1,000 shares
    authorized, issued and outstanding at December 31, 1996             1              -             -

   Paid-in-capital                                                 24,999              -             -
   Retained earnings (deficit)                                        535           (96,968)      (94,873)
   Cumulative translation adjustment                                 (462)           (4,395)       (1,849)
                                                              -----------       -----------    ----------

   Total stockholder's equity (deficit)                            25,073          (101,363)      (96,722)
                                                              -----------       -----------    ----------

Total liabilities and stockholder's equity (deficit)          $   301,307       $   192,707    $  192,709
                                                              ===========       ===========    ==========

The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       F-3

<PAGE>

<TABLE>
<CAPTION>
Clark Material Handling Company
 and Predecessor Businesses
Consolidated Statement of Operations (in thousands)
----------------------------------------------------------------------------------------------------------------


                                                             The Company                Predecessor
                                                             -----------    ------------------------------------
                                                                 One         Eleven
                                                                Month        Months
                                                                Ended         Ended
                                                              December      November    Years ended December 31,
                                                              31, 1996      26, 1996       1995           1994

<S>                                                          <C>            <C>          <C>           <C>
Net sales                                                    $  46,763      $ 404,629    $ 528,759     $ 472,652
Cost of goods sold                                              41,817        358,698      484,035       429,744
                                                             ---------      ---------    ---------     ---------

   Gross profit                                                  4,946         45,931       44,724        42,908

Engineering, selling and administrative expenses                 3,011         26,976       31,183        41,702

Parent company management fees                                    -             5,672        6,996         8,453

Severance and exit charges                                        -              -           3,478         6,736
                                                             ---------      ---------    ---------     ---------

   Income (loss) from operations                                 1,935        13,283         3,067       (13,983)

Other income (expense):
   Interest income                                                  25           220           602           653
   Allocated interest expense from parent company                 -          (14,656)      (16,145)      (14,361)
   Interest expense                                             (1,393)         (370)         (790)       (2,221)
   Amortization interest expense from parent company              -             (349)         (530)         (822)
   Gain on sale of Drexel business                                -             -             -            4,742
   Property impairment charge                                     -             -           (2,500)         -
   Other income (expense)-net                                      (32)         (223)         (975)        1,523
                                                             ---------      ---------    ---------     ---------


   Income (loss) before income taxes and extraordinary items       535        (2,095)      (17,271)      (24,469)

Provision for income taxes                                        -             -             (148)         (786)
                                                             ---------      ---------    ---------     ---------


   Income (loss) before extraordinary items                        535        (2,095)      (17,419)      (25,255)

Extraordinary loss on retirement of allocated debt                -             -           (1,347)         (565)
                                                             ---------      ---------    ---------     ---------


   Net income (loss)                                         $     535      $ (2,095)    $ (18,766)    $ (25,820)
                                                             =========      ========     =========     =========
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       F-4

<PAGE>

<TABLE>
<CAPTION>
Clark Material Handling Company
 and Predecessor Businesses
Consolidated Statement of Stockholders' Equity (in thousands)
----------------------------------------------------------------------------------------------------------------


                                                                                                       Foreign
                                                                                      Retained        currency
                                                       Common          Paid-in        earnings       translation
                                                        stock          capital        (deficit)      adjustments
                                                    ------------    ------------    ------------    ------------

THE PREDECESSOR

<S>                                                 <C>             <C>             <C>             <C>
Balance at December 31, 1993                                                        $    (50,287)   $     (8,646)

   Net loss, year ended December 31, 1994                                                 25,820)
   Translation adjustment                                                                                  4,731
                                                                                    ------------    ------------

Balance at December 31, 1994                                                             (76,107)         (3,915)

   Net loss, year ended December 31, 1995                                                (18,766)
   Translation adjustment                                                                                  2,066
                                                                                    ------------    ------------

Balance at December 31, 1995                                                             (94,873)         (1,849)

   Net loss, eleven months ended
    November 26, 1996                                                                     (2,095)
   Translation adjustment                                                                                 (2,546)
                                                                                    ------------    ------------

Balance at November 26, 1996                                                        $    (96,968)   $     (4,395)
                                                                                    ============    ============



THE COMPANY

   Issuance of common stock                         $          1    $     24,999    $               $
   Net income for the month ended
    December 31, 1996                                                                        535
   Translation adjustment                                                                                   (462)
                                                    ------------    ------------    ------------    ------------

Balance at December 31, 1996                        $          1    $     24,999    $        535    $       (462)
                                                    ============    ============    ============    ============




The accompanying notes are an integral part of these financial statements.
</TABLE>


                                                      F-5

<PAGE>

<TABLE>
<CAPTION>
Clark Material Handling Company
 and Predecessor Businesses
Consolidated Statement of Cash Flows (in thousands)
-----------------------------------------------------------------------------------------------------------------


                                                             The Company                 Predecessor
                                                             -----------   --------------------------------------
                                                                 One         Eleven
                                                                Month        Months
                                                                Ended         Ended      Years ended December 31,
                                                              December      November     ------------------------
                                                              31, 1996      26, 1996        1995         1994
                                                             ---------     ---------     ---------     ---------
Operating activities:
<S>                                                          <C>           <C>           <C>           <C>
   Net income (loss)                                         $     535     $  (2,095)    $ (18,766)    $ (25,820)
   Adjustments to reconcile net income (loss) to cash
    provided by (used in) operating activities:
     Depreciation                                                  778         9,312        11,534        10,066
     Amortization                                                  322         1,099         1,310         1,382
     Extraordinary loss on retirement of allocated debt         -             -              1,347           565
     Gain on sale of Drexel business                            -             -               -           (4,742)
     (Gain) loss on sale of property, plant and equipment           70            31           183            16
     Property impairment charge                                 -             -              2,500        -
     Other, net                                                 -             -                328        -
     Changes in operating assets and liabilities:
       Restricted cash                                            (136)         (220)         (516)          251
       Trade receivables                                         2,800        (2,406)         (240)       (6,210)
       Net inventories                                           9,801        (2,696)       (2,685)        2,672
       Trade accounts payable                                  (11,265)           61        (2,084)       13,027
       Accrued compensation and benefits                          (609)          409           (73)          559
       Accrued warranties and product liability                    237        (2,248)        1,126         1,344
       Due to parent company                                    -              8,720        19,187        28,262
       Other, net                                                  223        (5,876)       (5,973)      (12,377)
                                                             ---------     ---------     ---------     ---------

         Net cash provided by (used in) operating activities     2,756         4,091         7,178         8,995
                                                             ---------     ---------     ---------     ---------

   Investing activities
     Capital expenditures                                         (317)       (3,208)       (5,290)       (6,570)
     Proceeds from sale of assets                               -                139           534         2,984
     Proceeds from sale of Drexel business                      -             -               -           10,289
     Proceeds from sale-leaseback of Saarn property             -             -               -            9,981
                                                             ---------     ---------     ---------     ---------
         Net cash provided by (used in) investing
           activities                                             (317)       (3,069)       (4,756)       16,684
                                                             ---------     ---------     ---------     ---------

Financing activities
   Principal repayments of long-term debt                       -             -               -           (6,090)
   Repayment of allocated debt                                  -             -            (51,754)      (23,254)
   Proceeds from allocated debt                                 -                105        51,220        -
   Other, net                                                      293         1,376        (1,607)          135
                                                             ---------     ---------     ---------     ---------

         Net cash provided by (used in) financing
           activities                                              293         1,481        (2,141)      (29,209)
                                                             ---------     ---------     ---------     ---------

Effect of exchange rate changes on cash and cash
  equivalents                                                     (306)       (1,262)         (976)          748
                                                             ---------     ---------     ---------     ---------

Net increase (decrease) in cash and cash equivalents             2,426         1,241          (695)       (2,782)
Cash and cash equivalents at beginning of period                14,128           819         1,514         4,296
                                                             ---------     ---------     ---------     ---------

Cash and cash equivalents at end of period                   $  16,554     $   2,060     $     819     $   1,514
                                                             =========     =========     =========     =========

Supplemental disclosures
   Cash paid for interest                                    $      86     $     337     $     793     $   2,218
   Income taxes paid                                         $       -     $      17     $     148     $     790

The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       F-6

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
-------------------------------------------------------------------------------


NOTE A - REPORTING ENTITY AND BASIS OF PRESENTATION

Clark Material Handling Company (the "Company") is a wholly-owned  subsidiary of
CMH Holdings Corporation ("Holdings").  Prior to November 27, 1996, Holdings had
no previous business  operations and was formed for the purpose of acquiring the
Company  and its  subsidiaries  from Terex  Corporation  ("Terex" or the "Parent
Company") in a purchase business  combination.  That acquisition was consummated
on November 27, 1996. See Note C for information regarding the acquisition.

Prior to the acquisition,  the Company's predecessor businesses  ("Predecessor")
operated as wholly-owned subsidiaries of Terex. Reference to the Company relates
to  the  period  subsequent  to  November  26,  1996,  while  reference  to  the
Predecessor  relates to  operations  on or prior to  November  26,  1996.  Terex
acquired the Predecessor in 1992 in a purchase business  combination and Terex's
basis,  including its  acquisition  debt and goodwill  associated  with the 1992
acquisition were "pushed down" to the Predecessor's financial statements.

The Predecessor's  financial  statements  include  allocations of Parent Company
acquisition  debt and related interest  expense.  Management fees, which include
corporate overhead costs (including legal,  treasury and other shared services),
have been  allocated to the  Predecessor  based  generally on the  percentage of
Predecessor revenues to Terex consolidated  revenues.  Interest has been charged
on the management fee allocated and the due to Parent Company  balance at a rate
of 13% compounded monthly.

The Company and the Predecessor operate in one industry segment,  that being the
design,  manufacture,  marketing  and  worldwide  distribution  and  support  of
internal  combustion  and  electric  lift trucks,  electric  walkies and related
components and replacement  parts.  Geographic  segment  information is shown in
Note L.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of  consolidation.  The Company's  financial  statements  include the
accounts of the Company and its subsidiaries,  including Clark Material Handling
GmbH ("Germany") and Clark Forklift Korea ("Korea"). The Predecessor's financial
statements  include these same entities,  prior to their acquisition on November
27, 1996, on a combined basis. All material intercompany balances,  transactions
and profits have been eliminated.

Cash and cash equivalents. Cash equivalents consist of highly liquid investments
with original  maturities of three months or less.  The carrying  amount of cash
and cash equivalents approximates their fair value.

Cash securing  letters of credit.  The Company and the Predecessor  have certain
cash and cash  equivalents  that are not fully  available for use in operations.
Certain international operations collateralize letters of credit and performance
bonds with cash deposits.

Inventories.  Inventories  are stated at the lower of cost or market value.  The
Company  determines  cost  on the  first-in,  first-out  (FIFO)  method  for all
inventories. The Predecessor determined cost using the last-in, first-out (LIFO)
method  for  U.S.  inventories  and  by  the  FIFO  method  for  inventories  of
international subsidiaries. Approximately 67% and 68% of combined inventories at
November 26, 1996 and December 31, 1995, respectively,  were accounted for under
the LIFO method.

Goodwill.  Goodwill  represents the difference  between the total purchase price
and the fair value of assets and liabilities  (tangible and intangible) acquired
at the date of acquisition.  Goodwill  related to the Company is being amortized


                                      F-7
<PAGE>

Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
-------------------------------------------------------------------------------

on the  straight-line  method  over forty years  while  goodwill  related to the
Predecessor was being  amortized on a  straight-line  method over fifteen years.
The Company  reviews the  carrying  value of goodwill  for  impairment  whenever
events or changes in circumstances  indicate that the carrying amount may not be
recoverable.  Measurement  of any  impairment  would  include  a  comparison  of
discounted  estimated  future  operating cash flows  anticipated to be generated
during the  remaining  amortization  period of the  goodwill to the net carrying
value of goodwill.

Debt issuance  costs.  Debt issuance costs of the Company have been  capitalized
and are being amortized on the straight-line method over the term of the related
debt. With respect to the Predecessor,  debt issuance costs incurred in securing
the Parent Company's financing  arrangements were capitalized and amortized over
the term of the  associated  debt.  Allocated  debt  issuance  costs  related to
Terex's  acquisition  debt were also  allocated  to the  Predecessor.  Allocated
capitalized  debt issuance  costs  related to allocated  debt retired early were
also charged to expense at the time of  retirement.  Unamortized  debt  issuance
costs are  included  in other  assets and totaled  $5,552,  $2,549 and $2,898 at
December 31, 1996, November 26, 1996 and December 31, 1995, respectively. During
1995 and 1994, the Predecessor incurred extraordinary losses of $1,347 and $565,
respectively, relating to early retirement of allocated debt.

Property, plant and equipment. Property, plant and equipment are stated at cost.
Expenditures  for  major  renewals  and   improvements  are  capitalized   while
expenditures  for  maintenance and repairs not expected to extend the life of an
asset  beyond its normal  useful  life are  charged  to expense  when  incurred.
Depreciation   is  determined  for  financial   reporting   purposes  using  the
straight-line method over estimated useful asset lives, generally 20 to 35 years
for  buildings,  eight to twelve years for  machinery  and  equipment and two to
eight years for other assets.

Revenue recognition.  Revenue and costs are generally recorded when products are
shipped and invoiced to  customers.  Certain new units may be invoiced  prior to
the time customers take physical possession. Revenue is recognized in such cases
only when the customer has a fixed  commitment to purchase the units,  the units
have been  completed,  tested and made  available  to the customer for pickup or
delivery,  and the customer has  requested  that the units be held for pickup or
delivery at a time  specified  by the customer in the sales  documents.  In such
cases,  the units are invoiced under the customary  billing terms,  title to the
units and risks of ownership pass to the customer upon invoicing,  the units are
segregated  from  inventories  and  identified  as belonging to the customer and
there are no further obligations under the order.

Accrued  warranties and product  liability.  Accruals for potential warranty and
product liability claims are recorded based on past claim  experience.  Warranty
costs are accrued at the time revenue is recognized. Self-insurance accruals are
provided for  estimated  product  liability  experience  on known claims and for
claims  anticipated  to have been  incurred  which  have not yet been  reported.
Product liability accruals are presented on a gross settlement basis.

Foreign currency translation. Assets and liabilities of international operations
are translated at year-end exchange rates. Income and expenses are translated at
average  exchange  rates  prevailing  during  the  year.  For  operations  whose
functional  currency  is  the  local  currency,   translation   adjustments  are
accumulated in the cumulative translation adjustment account in equity. Gains or
losses resulting from foreign currency transactions are included in other income
(expense).

Environmental  policies.  Environmental  expenditures  that  relate  to  current
operations  are either  expensed or  capitalized  depending on the nature of the
expenditure.  Expenditures relating to conditions caused by past operations that
do not  contribute  to  current  or  future  revenue  generation  are  expensed.
Liabilities are recorded when environmental  assessments and/or remedial actions
are probable,  and the costs can be reasonably estimated.  Such amounts were not
material at December 31, 1996, November 26, 1996 and December 31, 1995.

                                       F-8

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


Income taxes.  Income taxes are provided  using the asset and  liability  method
required by Statement of Financial Accounting Standards (SFAS) No. 109. Pursuant
to a tax sharing  agreement with Holdings,  the Company  records a provision for
income taxes on a consolidated basis,  including Holdings.  At December 31, 1996
and the month then ended, this tax sharing arrangement did not differ materially
from that which would have occurred on a separate entity basis.  The Predecessor
provided for income taxes on a separate entity basis.

Use of estimates.  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods. Actual results could differ from those estimates.


NOTE C - ACQUISITION

On  November  27,  1996   Holdings   acquired  the  Company  and  the  Company's
subsidiaries  in  a  business  combination  accounted  for  as a  purchase.  The
aggregate purchase price for the acquisition was $139,500,  which was subject to
certain immaterial post-closing adjustments,  and was financed through a $25,000
equity  investment  by  Holdings  in the  common  stock of the  Company  and the
issuance of $130,000 in Senior Notes due 2006 by the Company. The purchase price
was  allocated  to the  estimated  fair  values of the  Company's  tangible  and
intangible  net assets with the remainder  allocated to goodwill.  The excess of
purchase price over the net assets  acquired of $109,542 is being amortized on a
straight-line basis over forty years.  Certain purchase allocation issues remain
open, however,  they are not expected to be material and will be resolved within
one year.

The operating results of the Company are included in the consolidated results of
operations  since November 27, 1996.  The following  unaudited pro forma summary
presents the consolidated results of operations as though Holdings completed the
Acquisition on January 1 of each period presented.

                                                     Year ended December 31,
                                                     -----------------------
                                                         1996        1995
                                                       --------    --------

       Net sales                                       $451,392    $528,759
                                                       --------    --------

       Income (loss) from operations                   $ 16,976    $  5,894
                                                       --------    --------

       Net income (loss)                               $  1,881    $(12,452)
                                                       --------    --------





                                       F-9

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


NOTE D - INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>

                                                                December 31,     November 26,     December 31,
                                                                    1996             1996            1995
                                                                ------------     -----------      ------------

<S>                                                              <C>              <C>              <C>
Finished equipment                                               $   12,797       $   18,043       $    9,410
Replacement parts                                                    24,107           22,428           22,966
Work-in-progress                                                      1,402            3,938            3,405
Raw materials and supplies                                           22,135           27,297           33,229
                                                                 ----------       ----------       ----------
                                                                     60,441           71,706           69,010

Less:  Excess of FIFO inventory value over LIFO cost                 -                  (546)            (546)
                                                                 ----------       ----------       ----------

   Net inventories                                               $   60,441       $   71,160       $   68,464
                                                                 ==========       ==========       ==========
</TABLE>

In 1994, certain inventory quantities were reduced, resulting in the liquidation
of LIFO inventory  quantities  carried at lower costs prevailing in prior years.
The effect of such  liquidation  was to decrease cost of goods sold and net loss
by $1,581 in 1994.


NOTE E - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                December 31,     November 26,     December 31,
                                                                    1996             1996            1995
                                                                ------------     -----------      ------------

<S>                                                              <C>              <C>              <C>
Property                                                         $    7,364       $    7,902       $    8,348
Plant                                                                15,556           19,498           20,262
Equipment                                                            28,779           56,552           55,433
                                                                 ----------       ----------       ----------

                                                                     51,699           83,952           84,043

Less: Accumulated depreciation                                         (685)         (32,799)         (25,849)
                                                                 ----------       ----------       ----------

Net property, plant and equipment                                $   51,014       $   51,153       $   58,194
                                                                 ==========       ==========       ==========
</TABLE>





                                      F-10

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


NOTE F - BORROWINGS, LINES OF CREDIT AND INDEBTEDNESS

Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
                                                                December 31,     November 26,     December 31,
                                                                    1996             1996            1995
                                                                ------------     -----------      ------------

<S>                                                              <C>              <C>              <C>
10.75% Senior Notes due 2006                                     $  130,000      $    -           $    -
13.25% Secured Notes due May 15, 2002 ("Senior
 Secured Notes")                                                     -                51,325           51,220
Capital lease obligations (Note G)                                    6,007            6,034            6,554
                                                                 ----------       ----------       ----------

     Total long-term debt                                           136,007           57,359           57,774
     Current portion of long-term debt                                2,407            2,404            2,414
                                                                 ----------       ----------       ----------


   Long-term debt, less current portion                          $  133,600      $    54,955      $    55,360
                                                                 ==========      ===========      ===========
</TABLE>

Senior Notes due 2006

The Senior Notes due 2006 ("Senior  Notes") were issued in  connection  with the
acquisition  of the Company and are due on November 15,  2006.  The Senior Notes
are  not  redeemable  at the  Company's  option  prior  to  November  15,  2001.
Thereafter,  the Senior Notes will be subject to redemption at the option of the
Company,  in  whole or in part,  upon  not less  than 30 nor more  than 60 days'
notice,  at the redemption prices (expressed as percentages of principal amount)
set forth  below  plus  accrued  and unpaid  interest  thereon,  if any,  to the
applicable date of redemption,  if redeemed during the 12 month period beginning
on November 15 of the years indicated below:

       Year                                                      Percentage
       2001                                                      105.375%
       2002                                                      102.688
       2003 and thereafter                                       100.000

The Senior Notes also contain provision for early redemption upon the occurrence
of  certain  significant  corporate  events,  including  an  offering  of equity
securities or a change in control of the Company.

Senior Secured Notes

The Senior Secured Notes  represented debt allocated to the Predecessor by Terex
and were eliminated upon the acquisition of the Company on November 27, 1996.

Revolving Line of Credit

The  Company  has  entered  into  a  $30,000   revolving  credit  facility  (the
"Facility") with Congress Financial  Corporation (the "Bank").  Borrowings under
the Facility are available for working capital and general  corporate  purposes,
including letters of credit.  The Facility is secured by first priority liens on
all accounts receivable and inventory of the Company's domestic operations.

The Facility expires in November 1999,  unless  extended.  The interest rate per
annum  applicable to the Facility is the prime rate, as announced  periodically,
plus 0.50% or, at the Company's option, the

                                      F-11

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

adjusted  Eurodollar rate plus 2.50%. The Facility permits the Company to prepay
loans and to  permanently  reduce  revolving  credit  commitments  or letters of
credit, in whole or in part, at any time in certain minimum amounts. The Company
is required to pay certain fees in  connection  with the  Facility,  including a
closing fee of 0.75% of the total  commitment  and a commitment  fee of 0.25% on
the undrawn portion of the revolving credit commitment.

The Facility contains customary  representations  and warranties,  and events of
default and certain other  covenants.  No  borrowings  were made on the Facility
through December 31, 1996.

Due to the recent  issuance of the Senior Notes,  the Company  believes that the
fair value  approximated  carrying  value at December 31, 1996.  At November 26,
1996, based on quoted market values, the Company believes that the fair value of
the Senior Secured Notes (allocated  long-term debt) was approximately  $47,744.
The Company believes that the carrying value of its other borrowings approximate
fair market value based on discounting  future cash flows using rates  currently
available for debt for similar terms and remaining maturities.


NOTE G - LEASE COMMITMENTS

The Company leases  certain  facilities,  machinery and equipment,  and vehicles
with  varying  terms.  Under most  leasing  arrangements,  the Company  pays the
property  taxes,  insurance,  maintenance  and  expenses  related  to the leased
property.  Certain of the equipment leases  classified as capital leases and the
related assets have been included in property, plant and equipment. Gross assets
under capital leases were $7,618,  $9,689 and $10,350 (accumulated  depreciation
of $101,  $2,131 and  $2,308) at  December  31,  1996,  November  26, 1996 and
December 31, 1995, respectively.

Future  minimum  capital and  noncancelable  operating  lease  payments  and the
related  present  value of capital  lease  payments at December  31, 1996 are as
follows:

                                                      Capital       Operating
                                                       Leases         Leases
                                                       ------         ------

1997                                                 $    2,839    $    3,421
1998                                                      1,968         1,514
1999                                                      1,280           476
2000                                                        650           126
2001                                                        252            29
Thereafter                                                   20            29
                                                     ----------    ----------
   Total minimum obligations                              7,009    $    5,595
                                                                   ==========
Less amount representing interest                         1,002
                                                     ----------
   Present value of net minimum obligations               6,007
Less current portion                                      2,407
                                                     ----------
   Long-term obligations                             $    3,600
                                                     ==========




                                      F-12

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
-------------------------------------------------------------------------------


Most of the Company's  operating  leases  provide the Company with the option to
renew the leases for  varying  periods  after the  initial  lease  terms.  These
renewal  options  enable the  Company  to renew the  leases  based upon the fair
rental  values at the date of  expiration  of the initial  lease.  Total  rental
expense under operating leases was as follows:

   One month ended December 31, 1996                             $    191
                                                                 ========

   Eleven months ended November 26, 1996                         $  1,886
                                                                 ========

   Year ended December 31, 1995                                  $  2,557
                                                                 ========

   Year ended December 31, 1994                                  $  4,414
                                                                 ========

In 1994, the Predecessor entered into a sale-leaseback transaction for its parts
distribution  center in  Germany.  The  Predecessor  received  net  proceeds  of
DM16,500 ($11,000) and leased the facility under the terms of a five year lease.
The  Predecessor  realized a gain of $3,866 which was deferred and was amortized
as a  reduction  of rental  expense  over the lease term  ($774 per  year).  The
unamortized  gain is included in other  non-current  liabilities at November 26,
1996 and December 31, 1995 and was eliminated upon the Company's  acquisition on
November 27, 1996.

The Company also routinely enters into  sale-leaseback  arrangements for certain
equipment,  which is similarly sold to third-party  customers  under  sales-type
lease  agreements.  The Company  maintains  a net  investment  in these  leases,
represented  by the present  value of payments due under the leases of $6,007 of
which $2,407 is current at December 31, 1996.

In  connection  with the original  sale-leaseback  arrangements  underlying  the
customer  leasing  program,  the Company has an outstanding  rental  installment
obligation  which is recorded based on the present value of minimum payments due
under the leases.


NOTE H - INCOME TAXES

The components of income (loss) before income taxes and extraordinary  items are
as follows:
<TABLE>
<CAPTION>
                                                                 One       Eleven
                                                                Month      Months
                                                                Ended      Ended      Years ended December 31,
                                                              December    November    ------------------------
                                                              31, 1996    26, 1996       1995           1994
                                                              --------    --------    ---------       --------

<S>                                                            <C>        <C>         <C>             <C>
United States                                                  $  165     $  2,541    $ (16,405)      $ (6,817)
Foreign                                                           370       (4,636)        (866)       (17,652)
                                                               ------     --------    ---------       --------
Income (loss) before income taxes and
   extraordinary items                                         $  535     $ (2,095)   $ (17,271)      $(24,469)
                                                               ======     ========    =========       ========
</TABLE>


                                      F-13

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


As a result of the  Predecessor's  operating  losses for book and tax  purposes,
provision  (benefit) for income taxes have been minimal,  relating  primarily to
state or foreign  jurisdictions  where taxable income occurred but net operating
loss ("NOL") carryforwards were limited.

The Company did not provide for income  taxes  during the one month period ended
December 31, 1996 as the result of incurring a taxable loss in the United States
and  utilizing  NOL   carryforwards   to  offset   taxable   income  in  foreign
jurisdictions.

The  provision  for income  taxes is  different  from the amount  which would be
provided by applying  the  statutory  federal  income tax rate to income  (loss)
before income taxes and extraordinary  items. The reasons for the difference are
summarized below:

<TABLE>
<CAPTION>
                                                                 One       Eleven
                                                                Month      Months
                                                                Ended      Ended      Years ended December 31,
                                                              December    November    ------------------------
                                                              31, 1996    26, 1996       1995           1994
                                                              --------    --------    ---------       --------
<S>                                                            <C>        <C>         <C>             <C>
Statutory federal income tax rate                              $   182    $   (712)   $  (6,045)     $  (8,564)
NOL with no current benefit                                                  1,575        5,651          2,449
NOL benefit                                                       (126)       (863)
Foreign tax differential on income/losses of foreign
 subsidiaries                                                                               303          6,178
State taxes                                                                                                498
Other                                                             (56)                      239            225
                                                               ------     --------    ---------       --------
   Total provision for income taxes                            $  -       $  -        $     148       $    786
                                                               ======     ========    =========       ========
</TABLE>

The tax effects of the basis differences and net operating loss carryforwards as
of December  31, 1996,  November  26, 1996 and December 31, 1995 are  summarized
below:

<TABLE>
<CAPTION>
                                                        December 31,     November 26,      December 31,
                                                            1996             1996              1995
                                                        ------------     ------------      ------------

<S>                                                      <C>              <C>               <C>
Net inventories                                          $     -          $   (9,343)       $  (8,982)
Property, plant and equipment                                   (81)            (247)          (2,085)
                                                         ----------       ----------        ---------

   Total deferred tax liabilities                               (81)          (9,590)         (11,067)
                                                         ----------       ----------        ---------

Receivables                                                     536              479              759
Net inventories                                               2,586             -                -
Warranties and product liability                             19,602           17,912           18,773
All other items                                               2,330              991            1,538
Benefit of net operating loss carryforwards                  19,506           54,574           52,838
                                                         ----------       ----------        ---------

   Total deferred tax assets                                 44,560           73,956           73,908
                                                         ----------       ----------        ---------

Deferred tax assets valuation allowance                     (44,479)         (64,366)         (62,841)
                                                         ----------       ----------        ---------

   Net deferred tax assets                               $   -            $        -        $       -
                                                         ==========       ==========        =========
</TABLE>


                                      F-14

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------



Basis  differences  between  the amounts  assigned  to net assets for  financial
reporting  purposes and the amounts assigned for tax purposes  resulted in a net
deferred  tax asset of  $44,479.  In light of the  Company's  and  Predecessor's
operating history, management provided a valuation allowance in the same amount.

At  December  31,  1996,  the  Company  had  U.S.  federal  net  operating  loss
carryforwards of $93 which expire in 2011. U.S. net operating loss carryforwards
at November 27, 1996 remain with Terex in connection with the acquisition of the
Company.

In addition,  the Company's foreign  subsidiaries have approximately  $42,128 of
loss carryforwards,  $38,294 in Germany and $3,834 in other countries, which are
available to offset future foreign taxable  income.  The loss  carryforwards  in
Germany  are  available  without  expiration.  The loss  carryforwards  in other
countries expire in the years 1997 through 2001.


NOTE I - RETIREMENT PLANS

Pension Plans

The Company does not provide any pension plans for its U.S.  employees.  Certain
of the Company's German employees are covered by noncontributory defined benefit
pension plans.  The Company also maintains  separate  pension  benefit plans for
German executive  employees and for other staff. The executive pension plans are
based on final pay and  service,  and, in some cases,  are  dependent  on social
security pensions while the other staff plans are based on fixed amounts applied
to the number of years service rendered. The plans are unfunded.

The components of consolidated pension expense for each of the reporting periods
covered by these financial statements is as follows:

<TABLE>
<CAPTION>
                                                                 One       Eleven
                                                                Month      Months
                                                                Ended      Ended      Years ended December 31,
                                                              December    November    ------------------------
                                                              31, 1996    26, 1996       1995           1994
                                                              --------    --------    ---------       --------
<S>                                                            <C>        <C>         <C>             <C>
Current service cost                                          $      2    $     38    $      57       $    174
Interest cost                                                       52         840          886            877
Net amortization and deferrals                                       7         107         (927)          (820)
                                                              --------    --------    ---------       --------

Defined benefit pension expense                               $     61    $    985    $      16       $    231
                                                              ========    ========    =========       ========
</TABLE>




                                      F-15

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


The  following  table  summarizes  the funded  status of the  Company's  defined
benefit pension plans to the amounts recognized in the financial statements:

<TABLE>
<CAPTION>
                                                        December 31,     November 26,     December 31,
                                                            1996             1996             1995
                                                        ------------     ------------     ------------
<S>                                                      <C>              <C>              <C>
Projected benefit obligations                            $  12,379        $  12,427         $  12,843
Unrecognized net gain/(loss)                                     -              256              (930)
Unrecognized prior service cost                                  -             (331)              368
Unrecognized transition asset (liability)                        -             (522)              620
Adjustment required to recognize minimum liability               -                -                 5
                                                         ---------        ---------         ---------

Accrued pension cost                                     $  12,379        $  11,830         $  12,906
                                                         =========        =========         =========
</TABLE>

The accumulated  benefit obligations do not differ materially from the projected
benefit  obligations.  A  discount  rate of 7.5%  was  used in 1996  and 1995 to
determine  the  projected  benefit  obligation.  During  1994,  the  Predecessor
significantly  reduced its German work force in connection with restructuring of
its operations.  As a result,  the Predecessor  realized a curtailment gain with
respect to these plans,  which was recognized as a reduction of the unrecognized
transition liability.  In 1994, the Predecessor changed certain assumptions used
in the actuarial valuation of the plans. These changes in assumptions  reflected
the reductions in personnel and other changes in the  Predecessor's  operations,
including changes in compensation  arrangements,  implemented during 1994. These
changes  resulted in an actuarial  gain of $2,724.  The gain in excess of 10% of
the projected benefit obligation was amortized over 2 years.

Savings Plans

The Company  sponsors  various tax deferred  savings  plans into which  eligible
employees may elect to contribute a portion of their  compensation.  The Company
can, but is not obligated to, contribute to certain of these plans.

Other Postemployment Benefits

The Company does not have any benefit  program which provides  retiree health or
life insurance benefits.


NOTE J - LITIGATION, COMMITMENTS AND CONTINGENCIES

Business  lawsuits  have been filed  alleging  damages for  accidents  that have
arisen in the normal course of  operations.  As part of the  acquisition  of the
Predecessor,  the  Company  assumed  both the  outstanding  and  future  product
liability  exposures related to such operations.  As of December 31, 1996, there
were  approximately  99 lawsuits  outstanding  alleging  damages for injuries or
deaths arising from accidents involving forklift products. Most of the foregoing
suits are in various stages of pretrial  completion,  and certain plaintiffs are
seeking punitive as well as compensatory  damages.  The Company is self-insured,
up to certain  limits,  for these product  liability  exposures,  as well as for
certain  exposures  related to general,  workers'  compensation  and  automobile
liability.  Insurance  coverage is obtained for  catastrophic  losses as well as
those risks required to be insured by law or contract.  The Company has recorded
and   maintains  an   estimated   liability,   based  in  part  upon   actuarial
determinations,  in  the  amount  of  management's  estimate  of  the  Company's
aggregate exposure for such self-insured risks. Effective November 27, 1996, the
Company was no longer  self-insured for general,  workers  compensation and auto
liability and had various insurance policies with insuring agencies.

                                      F-16

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

The Company is involved in various other legal  proceedings which have arisen in
the normal  course of  operations.  The  Company  has  recorded  provisions  for
estimated  losses in  circumstances  where a loss is probable  and the amount or
range of possible amounts of the loss is estimable.

The Company is contingently  liable as a guarantor for certain  customers' floor
plan obligations  with financial  institutions.  As a guarantor,  the Company is
obligated to purchase  equipment  which has been  repossessed  by the  financial
institution  based  upon the  unamortized  principal  balance  outstanding.  The
Company records the repossessed inventory at its estimated net realizable value.
Any resultant losses are charged against related  reserves.  The guarantee under
such floor plans  aggregated  approximately  $25,000 at December 31,  1996.  The
Company has  recorded  reserves  based on  management's  estimates  of potential
losses arising from these guarantees. Historically, the Predecessor had incurred
only minimal losses relating to these arrangements.

The  Company  is  contingently  liable for a portion  of the  residual  value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms  generally  ranging from three to five
years.  At December 31, 1996,  November 26, 1996 and December 31, 1995 there was
$1,188,  $1,065 and $1,453,  respectively,  of repurchased  machines included in
inventory.  Historically,  the  Predecessor  had made a profit on the subsequent
resale of repurchased  machines.  At December 31, 1996,  the maximum  contingent
liability was approximately $11,000.

The Company is  contingently  liable on guarantees  given by the  Predecessor to
financial  institutions  relating to capital loans and other dealer and customer
obligations  arising in the ordinary  conduct of its business.  Such  guarantees
approximated  $2,885 at December 31,  1996.  Estimated  losses,  if any, on such
guarantees  are accrued as a component of the allowance  for doubtful  accounts.
Historically,  the  Predecessor  had  not  incurred  material  losses  on  these
guarantees.

To enhance its marketing effort and ensure continuity of its dealer network, the
Company's dealer sales agreements obligate the Company to repurchase certain new
and unused equipment in the event of a dealer termination. Repurchase agreements
included in operating agreements with an independent  financial institution have
been patterned after those included in the dealer sales agreements,  and provide
for  repurchases  of inventory  in certain  circumstances  of dealer  default on
financing provided by the financial  institution to the dealer. Dealer inventory
of  approximately  $170,000 at December 31, 1996, was covered by those operating
agreements.  Under these agreements,  when dealer terminations do occur, a newly
selected dealer generally assumes the assets of the prior dealer and any related
financial obligations.  Historically,  the Predecessor had incurred only minimal
losses relating to these arrangements.

The Company's outstanding letters of credit totaled $1,637 at December 31, 1996.
The letters of credit  generally  serve as  collateral  for certain  liabilities
included  in the  balance  sheet.  Certain  of the  letters  of credit  serve as
collateral guaranteeing the Company's performance under contracts.

The Company is a wholly-owned subsidiary of Holdings.  Other than its investment
in the  Company,  Holdings  has no  other  substantive  business  activities  or
operations.  Holdings  has financed its  investment  in the Company  through the
issuance of $7,000 of Junior  Subordinated  Debentures,  bearing interest at 12%
per annum and  maturing  in 2007,  $17,000  of  preferred  stock  with an annual
cumulative dividend of 12% and $1,000 of common stock.  Although the Company has
not  guaranteed  Holdings'  debt or preferred  stock  dividend  obligations,  or
otherwise assumed such  obligations,  Holdings will look to the Company's assets
and cash flows to meet its interest,  debt and dividend  obligations when and if
they are paid.

                                      F-17

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------



NOTE K - RELATED PARTY TRANSACTIONS

The following table summarizes related party transactions conducted with Terex:
<TABLE>
<CAPTION>
                                                                 One       Eleven
                                                                Month      Months
                                                                Ended      Ended      Years ended December 31,
                                                              December    November    ------------------------
                                                              31, 1996    26, 1996       1995           1994
                                                              --------    --------    ---------       --------
<S>                                                           <C>         <C>         <C>             <C>
Distribution expenses                                         $   -       $   6,100   $   7,088       $   6,584
Terex management fee allocation                                   -           5,672       6,996           8,453
Interest expense                                                  -          14,656      16,145          14,361
Interest income                                                   -             150         480             480
</TABLE>

The Predecessor utilized the services of the Terex worldwide distribution center
for services related to its replacement parts business.  Distribution  expenses,
which  are  included  in cost of goods  sold,  reflect  the  charges  for  those
services.  This arrangement was continued by the Company  subsequent to November
26, 1996 for an annual fee of approximately $6,000.

Sales to affiliated companies were not material in any of the years presented.


NOTE L - GEOGRAPHIC SEGMENT INFORMATION
<TABLE>
<CAPTION>
                                                                 One       Eleven
                                                                Month      Months
                                                                Ended      Ended      Years ended December 31,
                                                              December    November    ------------------------
                                                              31, 1996    26, 1996       1995           1994
                                                              --------    --------    ---------       --------
<S>                                                           <C>         <C>         <C>             <C>
Sales
   North America                                              $  31,480   $ 286,992   $ 385,611       $ 350,604
   Europe                                                        15,787     126,045     162,396         137,478
   All other                                                        231          85         116          26,800
   Eliminations                                                    (735)     (8,493)    (19,364)        (42,230)
                                                              ---------   ---------   ---------       ---------
     Total                                                    $  46,763   $ 404,629   $ 528,759       $ 472,652
                                                              =========   =========   =========       =========

Income (loss) from operations
   North America                                              $   1,389   $  10,307   $    (523)      $  (8,403)
   Europe                                                           571       3,664       3,973          (5,405)
   All other                                                        (25)       (688)       (379)           (541)
   Eliminations                                                    -           -             (4)            366
                                                              ---------   ---------   ---------       ---------
     Total                                                    $   1,935   $  13,283   $   3,067       $ (13,983)
                                                              =========   =========   =========       =========

</TABLE>

                                      F-18
<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 One       Eleven
                                                                Month      Months
                                                                Ended      Ended      Years ended December 31,
                                                              December    November    ------------------------
                                                              31, 1996    26, 1996       1995           1994
                                                              --------    --------    ---------       --------
<S>                                                           <C>         <C>         <C>             <C>
Identifiable assets
   North America                                              $ 265,472   $  98,553   $  95,107       $ 107,930
   Europe                                                        89,861      96,595     101,054          91,931
   All other                                                     10,161      10,353       9,650          14,899
   Eliminations                                                 (64,187)    (12,794)    (13,102)        (20,098)
                                                              ---------   ---------   ---------       ---------
     Total                                                    $ 301,307   $ 192,707   $ 192,709       $ 194,662
                                                              =========   =========   =========       =========
</TABLE>

Sales  between  geographic  areas are  generally  priced to recover costs plus a
reasonable markup for profit.  Operating income equals net sales less direct and
allocated operating expenses, excluding interest and other nonoperating items.

The Company is not dependent upon any single customer.


NOTE M - SEVERANCE ACTIONS

The  Predecessor  announced  personnel  reductions  totaling  approximately  134
employees in the North American  operations during 1995 as a continuation of the
Predecessor's  programs to increase manufacturing  efficiency,  reduce costs and
improve liquidity.  The Predecessor recorded a combined charge of $3,478 in 1995
for  severance  costs   associated  with  these  actions  and  additional  costs
associated with the closing of certain  administrative and warehouse facilities.
Also during 1995, the  Predecessor  recorded a charge of $2,500 to recognize the
impairment in value of certain properties held for sale in Korea.

In 1994, the Predecessor  announced  personnel  reductions in plant supervision,
engineering,  marketing and administration  totaling approximately 160 employees
in its North American and European  operations.  Also in 1994,  the  Predecessor
announced additional personnel reductions totaling approximately 90 employees in
conjunction  with the  closing  of the Korean  plant and  certain  branch  sales
offices  in  France.  The  Predecessor  recorded  a charge of $6,736  for costs,
principally  severance  costs,  associated with these actions.  Also in 1994 the
Predecessor  sold its Drexel  forklifts  division  and realized a pretax gain of
$4,742.

                                      F-19

<PAGE>


Clark Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


NOTE N - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
                                            Balance
                                              at                                                        Balance
                                           beginning                        (1)            (2)          at end
                                           of period      Provision        Other       Deductions      of period
                                           ---------      ---------        -----       ----------      ---------

<S>                                       <C>            <C>            <C>            <C>             <C>
The Company
One month ended December 31, 1996
Allowance for Doubtful Accounts           $   -          $      164     $      (12)    $   -           $     152
Reserve for Excess/Obsolete Inventory         -                 160            (13)        -                 147


The Predecessor
Eleven months ended November 26, 1996
Allowance for Doubtful Accounts           $    2,867     $       59     $      (48)    $     (740)     $   2,138
Reserve for Excess/Obsolete Inventory          4,713          1,373            (47)        (2,526)         3,513

Year ended December 31, 1995
Allowance for Doubtful Accounts           $    3,600     $     -        $       71     $     (804)     $   2,867
Reserve for Excess/Obsolete Inventory          6,350          2,453             71         (4,161)         4,713

Year ended December 31, 1994
Allowance for Doubtful Accounts           $    4,643     $     -        $      106     $   (1,149)     $   3,600
Reserve for Excess/Obsolete Inventory          6,397          2,383             59         (2,489)         6,350

--------------

(1)  Effect of exchange rate
(2)  Utilization of established reserves, net of recoveries
</TABLE>


                                      F-20

<PAGE>
EXHIBIT INDEX

   Exhibit
   No.                             Description
   ---                             -----------

   3.1    Certificate  of  Incorporation,  as amended,  of the Company
          (incorporated  by reference to Exhibit 3.1 to the  Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

   3.2    By-laws of the Company (incorporated by reference to Exhibit
          3.2 to the  Company's  Registration  Statement  on Form S-4,
          Registration No. 333-18957)

   4.1    Indenture  dated as of November 27, 1996 between the Company
          and United  States  Trust  Company  of New York,  as Trustee
          (incorporated  by reference to Exhibit 4.1 to the  Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

   4.2    Registration  Rights Agreement dated as of November 27, 1996
          among the  Company,  Jefferies  &  Company,  Inc.  and Bear,
          Stearns & Co. Inc. (incorporated by reference to Exhibit 4.2
          to  the  Company's   Registration  Statement  on  Form  S-4,
          Registration No. 333-18957)

   4.3    Form of 103/4%  Senior  Notes due 2006  (included in Exhibit
          4.1)  (incorporated  by  reference  to  Exhibit  4.3  to the
          Company's  Registration  Statement on Form S-4, Registration
          No. 333-18957)

  10.1    Purchase   Agreement  dated  November  22,  1996  among  the
          Company,  Jefferies & Company,  Inc. and Bear, Stearns & Co.
          Inc.  (incorporated  by  reference  to  Exhibit  10.1 to the
          Company's  Registration  Statement on Form S-4, Registration
          No. 333-18957)

  10.2    Loan and Security  Agreement  dated November 27, 1996 by and
          between  Congress  Financial  Corporation  and  the  Company
          (incorporated  by reference to Exhibit 10.2 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

  10.3    Stock and Asset  Purchase  and Sale  Agreement,  dated as of
          November 9, 1996 among Terex Corporation, and certain of its
          subsidiaries  and the Company  (incorporated by reference to
          Exhibit 10.3 to the Company's Registration Statement on Form
          S-4, Registration No. 333-18957)

  10.4    Service  Agreement  dated as of November  27,  1996  between
          Terex Corporation and the Company (incorporated by reference
          to Exhibit 10.4 to the Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

  10.5    Indemnity as to Letters of Credit, Performance Bonds, Appeal
          Bonds,  Guaranties,  etc.  dated  November  27,  1996 by the
          Company  in favor of Terex  Corporation,  for  itself and as
          successor  to  CMH   Acquisition   Corp.,   CMH  Acquisition
          International  Corp.,  Clark Material  Handling  Company and
          Clark Material Handling International, Inc. (incorporated by
          reference  to  Exhibit  10.5 to the  Company's  Registration
          Statement on Form S-4, Registration No. 333-18957)

  10.6    Employment  Agreement  dated as of November 27, 1996 between
          Holdings and Dr. Martin M. Dorio  (incorporated by reference
          to Exhibit 10.6 to the Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

  10.7    Tax Sharing  Agreement  made as of November 27, 1996 between
          Holdings  and the  Company  (incorporated  by  reference  to
          Exhibit 10.7 to the Company's Registration Statement on Form
          S-4, Registration No. 333-18957)

  10.8    Stock Purchase  Agreement,  dated as of May 27, 1992, by and
          between  Clark  Equipment   Company  and  Terex  Corporation
          (incorporated  by reference to Exhibit 10.8 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

  10.9    First Amendment to the Stock Purchase Agreement, dated as of
          July 31, 1992,  by and between Clark  Equipment  Company and
          Terex Corporation (incorporated by reference to Exhibit 10.9
          to  the  Company's   Registration  Statement  on  Form  S-4,
          Registration No. 333-18957)


<PAGE>


 10.10    Trademark Assignment  Agreement,  dated as of July 31, 1992,
          by and between Clark  Equipment  Company and Clark  Material
          Handling Company (incorporated by reference to Exhibit 10.10
          to  the  Company's   Registration  Statement  on  Form  S-4,
          Registration No. 333-18957)

 10.11    Second  Amended and Restated  General  Operating  Agreement,
          dated  November  29,  1990,  by and between  Clark  Material
          Handling Company and Chase Manhattan  Leasing Company,  Inc.
          (incorporated by reference to Exhibit 10.11 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

 10.12    Second  Amendment to the Second Amended and Restated General
          Operating  Agreement,  dated  April 15,  1994,  by and among
          Clark Material Handling Company, Drexel Industries, Inc. and
          Clark  Credit  Corporation  (incorporated  by  reference  to
          Exhibit  10.12 to the  Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 10.13    Third  Amendment to the Second Amended and Restated  General
          Operating  Agreement,  dated August 1, 1994,  by and between
          Clark Material Handling Company and Clark Credit Corporation
          (incorporated by reference to Exhibit 10.13 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

 10.14    Assignment of Second Amended and Restated General  Operating
          Agreement,  dated  March  22,  1995,  by and  between  Clark
          Material Handling Company,  Clark Credit Corporation,  f/k/a
          Chase Manhattan Leasing Company,  and Associates  Commercial
          Corporation  (incorporated  by reference to Exhibit 10.14 to
          the   Company's   Registration   Statement   on  Form   S-4,
          Registration No. 333-18957)

 10.15    Master Software License and Service Agreement, dated May 17,
          1996,  between  Clark  Material  Handling  Company  and SDRC
          Operations  (incorporated  by reference to Exhibit  10.15 to
          the   Company's   Registration   Statement   on  Form   S-4,
          Registration No. 333-18957)

 10.16    Letter  Agreement,  dated  October 26, 1995,  between  Clark
          Material   Handling  Company,   Manufacturers   Distribution
          Services, Inc. and Maine Rubber International  (incorporated
          by reference to Exhibit 10.16 to the Company's  Registration
          Statement on Form S-4, Registration No. 333-18957)

 10.17    MCI  Services  Agreement,  effective  as of  July  1,  1995,
          between  MCI   Telecommunications   Corporation   and  Clark
          Material  Handling  Company  (incorporated  by  reference to
          Exhibit  10.17 to the  Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 10.18    Agreement for Systems Operations Services, dated as of March
          2,  1992,   between  Clark  Material  Handling  Company  and
          Integrated  Systems  Solutions  Corporation,  as  amended by
          Amendments  #1  through #5  (incorporated  by  reference  to
          Exhibit  10.18 to the  Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 10.19    Supply  Agreement,  dated  December 14, 1994,  between Clark
          Material  Handling  Company and Funk  Manufacturing  Company
          (incorporated by reference to Exhibit 10.19 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

 10.20    Supply Agreement, dated July 1, 1995, between Clark Material
          Handling    Company   and   Funk    Manufacturing    Company
          (incorporated by reference to Exhibit 10.20 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

 10.21    Supply  Agreement,  dated  January  1, 1988,  between  Clark
          Material Systems  Technology  Company and HydroElectric Lift
          Trucks Inc.  (incorporated  by reference to Exhibit 10.21 to
          the   Company's   Registration   Statement   on  Form   S-4,
          Registration No. 333-18957)

 10.22    Amendment  Agreement,  dated  March 2, 1992,  between  Clark
          Material  Handling  Company and  HydroElectric  Lift Trucks,
          Inc.  (incorporated  by  reference  to Exhibit  10.22 to the
          Company's  Registration  Statement on Form S-4, Registration
          No. 333-18957)


<PAGE>


 10.23    Second  Amendment  Agreement,   dated  September  30,  1992,
          between Clark Material  Handling  Company and  HydroElectric
          Lift  Trucks,  Inc.  (incorporated  by  reference to Exhibit
          10.23 to the Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

 10.24    Agreement,  dated  June 1,  1983,  between  Clark  Equipment
          Company  and  Mitsubishi   Corporation,   Mitsubishi   Heavy
          Industries,  Ltd.  and  Mitsubishi  Motors  Corporation,  as
          amended  (incorporated  by reference to Exhibit 10.24 to the
          Company's  Registration  Statement on Form S-4, Registration
          No. 333-18957)

 10.25    Master Contract for Purchase and Sale,  dated July 17, 1995,
          between Clark Material  Handling Company and Custom Tool and
          Manufacturing  Company (incorporated by reference to Exhibit
          10.25 to the Company's  Registration  Statement on Form S-4,
          Registration No. 333-18957)

 10.26    Supply  Agreement,  dated  December 20, 1991,  between Clark
          Material Handling Company and Dixson, Inc.  (incorporated by
          reference  to Exhibit  10.26 to the  Company's  Registration
          Statement on Form S-4, Registration No. 333-18957)

 10.27    Lease Agreement,  dated as of April 15, 1987, between Vergil
          D. Kelly and Kenny  Angelucci  and Clark  Equipment  Company
          with respect to 172 Trade Street,  Lexington,  Kentucky,  as
          amended  by  Amendment  #1 to Lease  dated  April  15,  1987
          (incorporated by reference to Exhibit 10.27 to the Company's
          Registration   Statement  on  Form  S-4,   Registration  No.
          333-18957)

 10.28    Standard Form Dealer Sales Agreements between Clark Material
          Handling Company and domestic dealer entities  (incorporated
          by reference to Exhibit 10.28 to the Company's  Registration
          Statement on Form S-4, Registration No. 333-18957)

 10.29    Agreement,  dated as of September  12, 1995,  by and between
          Clark  Material   Handling   Company  and  Nissan   Forklift
          Corporation,  North  America  (incorporated  by reference to
          Exhibit  10.29 to the  Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 10.30    License  Agreement  dated as of November  27,  1996  between
          Holdings  and the  Company  (incorporated  by  reference  to
          Exhibit  10.30 to the  Company's  Registration  Statement on
          Form S-4, Registration No. 333-18957)

 21.1     Subsidiaries  of the Company  (incorporated  by reference to
          Exhibit 12.1 to the Company's Registration Statement on Form
          S-4, Registration No. 333-18957)

 27       Financial Data Schedule


<PAGE>